(C) Reuters. FILE PHOTO: Frankfurt’s airport during COVID-19
FRANKFURT (Reuters) – Lufthansa (E:LHAG) will seek to avoid a grounding and insolvency, Chief Executive Carsten Spohr said on Sunday, before a showdown between the airline’s biggest shareholder and the German government over the terms of a 9-billion-euro bailout.
Lufthansa has been hard hit by what is expected to be a protracted travel slump because of the COVID-19 pandemic, forcing it to seek a bailout.
Billionaire shareholder Heinz Hermann Thiele will meet the economics minister on Monday to discuss his objections to the state-backed bailout, a source close to the matter told Reuters.
As an alternative to the government taking a direct stake in Lufthansa, Thiele has proposed an indirect participation through state-owned German development bank KfW [KFW.UL].
In a letter to employees, Spohr said the airline was in intense talks with the government and large shareholders which had “the clear goal of finding a satisfactory solution for our company and all participants before Thursday,” when an extraordinary shareholder meeting will be held.
Expressing his desire to avoid a grounding or insolvency, he said: “I am sure this is an objective which unites all parties.”
Lufthansa warned last week that a failure to secure shareholder approval for the bailout could force it to apply for protection from creditors under German insolvency law.
The bailout requires the support of more than two thirds of shareholders. Thiele, who has 15.5% of Lufthansa’s shares, objects to the German state taking a 20% stake and seats on its supervisory board.
Spohr said shareholders representing 38% of the company’s capital had registered for the shareholder vote, handing Thiele an effective veto if he does not endorse the proposed deal.
Lufthansa will pay June salaries on Monday, Spohr said in the letter.
Lufthansa and Germany’s finance ministry declined to comment on the meeting. Thiele could not be reached for comment.
($1 = 0.8949 euros)
Lufthansa gears up for bailout showdown with investor
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.