Lufthansa needs more money to survive

A bailout is on the table for Lufthansa.

Yesterday, Lufthansa announced that it is in talks with the German government to obtain a bailout worth 9 billion Euros. 

Lufthansa is in desperate need of money because since the pandemic started, the company spends around 800 million Euros per month to support its grounded fleet. Three hundred aircraft will be grounded in 2021 because they expect a rebound in demand for flights.

Of course, if approved, the deal would come with strings attached. Rumor has it that the government will be part of the company’s supervisory board, but it will vote only in an exceptional situation such as a takeover.

The bailout package consists of 3 billion Euros loan, the government holding a seat in the board, and 20% worth of shares stake. Moreover, the government will receive 5% worth of convertible bonds and one extra share.

Lufthansa thickens the line of air carriers that need help, such as Air-France KLM, American Airlines, United Airlines, and Delta. The American airlines have already received a $25 billion aid package, but they are still facing bankruptcy.

The deal will come in force once the European Commission approves it.

The stock price gained 8.3% during yesterday’s trading session, and another 5.6% today. Overall, Lufthansa lost almost 50% of its value this year. 

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Sources: reuters.com, aljazeera.com, yahoo.com


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