Skip to main content
//empty //empty

Airplanes belonging to German carrier Lufthansa sit parked at the Berlin Schoenefeld airport on May 26, 2020.

Fabrizio Bensch/Reuters

Lufthansa shareholders on Thursday backed a 9 billion euro ($10 billion) government bailout, securing the future of Germany’s flagship airline after it was brought to the brink of collapse by the COVID-19 pandemic.

The plan, backed by 98 per cent of the shareholder capital that cast a vote at the online meeting, will see Berlin take a 20 per cent stake in Lufthansa and two board seats.

Shares in the company, which employs around 138,000 people, closed 7.1 per cent higher, having risen strongly earlier after top shareholder Heinz Hermann Thiele dropped objections to the deal.

Story continues below advertisement

Also on Thursday, European Union regulators approved Lufthansa’s 6 billion euro recapitalisation, part of the bailout deal, subject to a ban on dividends, share buybacks and some acquisitions until state support is repaid.

The approvals will come as a relief to Chancellor Angela Merkel, who could ill afford another high-profile business collapse following the failure of payments firm Wirecard.

Finance Minister Olaf Scholz welcomed the approval.

“This is very, very good news. Good for the company, for the workers at Lufthansa and for Germany,” he said.

The state’s involvement was for a limited time and when the carrier was fit again, it would sell the stake, hopefully at a profit, he said.

Economy Minister Peter Altmaier said it was clear that with the state holding a minority stake, Lufthansa would remain an independent company but the deal made it possible to prevent a hostile takeover.

But tough decisions lie ahead, with Lufthansa working on a restructuring plan in which up to 22,000 jobs could be at risk - although CEO Carsten Spohr told Bild newspaper that hours and wages could be reduced by a fifth instead of axing a fifth of jobs.

Story continues below advertisement

Lufthansa has been brought to its knees by COVID-19 and what promises to be a protracted travel slump, and like many rivals, sought state help to stay afloat. Even after Thursday’s gains, its shares are down almost 40 per cent this year.

Concerned a government stake would make it harder for Lufthansa to make tough restructuring decisions, Thiele had instead proposed an indirect government holding in the airline via Germany’s KfW development bank.

That sparked fears the bailout would fail and Lufthansa would have to seek protection from creditors within days.

Thiele, who recently increased his stake in Lufthansa to 15.5 per cent, told the Frankfurter Allgemeine daily that “differences remain with government representatives.”

But he said he could not have voted for insolvency, adding he would continue to seek to influence the company’s development, though he declined to say how.

The 79-year-old brakes billionaire said it was in the interests of Lufthansa employees that management quickly negotiate restructuring with unions.

Story continues below advertisement

Lufthansa struck a deal overnight with the UFO union representing German cabin crew that is set to reap more than 500 million euros in savings, including steps to stop pay rises, cut working hours, and a cap on pension contributions.

More talks are scheduled on Friday with services union Verdi.

Spohr said the government did not plan to get involved in the operations of the airline.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Follow related topics

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies