Airlines took a hard hit from the pandemic, as travel restrictions were imposed, and now, as the countries start to reopen their borders, the traffic is low. Companies around the world struggle to avoid bankruptcy by receiving financial aid from governments, and by cutting off jobs.
Things change when shareholders and governments don’t see eye to eye, like in Lufthansa's case. The company's biggest shareholder, Heinz Hermann Thiele, is to meet with the German economics minister to discuss the 9 billion EUR bailout. The billionaire disapproves of some terms of the bailout deal, especially the one that makes Germany a shareholder by receiving 20% of it and two seats in the supervisory board. Thiele proposed indirect participation through the German development bank KfW.
Lufthansa is considering that the deal could not go through, and it might apply for protection from creditors based on the German insolvency law. A board meeting will take place on Thursday, and the deal will need two-thirds to pass.
On the other side of the Atlantic, American Airlines seeks to secure $3.5 billion worth of financing meant to provide liquidity. According to it, $1.5 billion will be raised by selling shares and convertible senior notes with maturity in 2025.Another $1.5 billion will be from secured notes, and $500 million is a term loan due in 2024. The airline will have as underwriters Goldman Sachs, Citigroup, BofA Securities, and JP Morgan.
Lufthansa’s stock price fell by more than 4%, while American Airlines lost almost 8% in today’s pre-market session.
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Sources: investing.com, reuters.com, skift.com