Lufthansa's supervisory board would have preferred not to be in this position. But this was the only way forward for the company.
Lufthansa’s supervisory board has approved a 9 billion euro ($10 billion) government bailout that will force the German airline to give some of its prized landing slots to rivals.
The approval marks the latest step in the complex state rescue of Lufthansa, which has been badly hit by the coronavirus pandemic’s impact on the travel sector.
Under the plans, the German government will take a 20% stake in the airline, which could rise to 25% plus one share in the event of a takeover attempt, as well as two seats on its supervisory board.
Lufthansa will also be obliged to transfer to rivals up to 24 take-off and landing slots at Frankfurt and Munich airports.
“We recommend that our shareholders follow this path, even if it requires them to make substantial contributions to stabilising their company,” supervisory board Chairman Karl-Ludwig Kley said in a statement.
“It must be clearly stated, however, that Lufthansa is facing a very difficult road ahead.”
The bailout still needs to be approved by regulators and Lufthansa investors, who are due to meet virtually at an extraordinary general meeting on June 25, Lufthansa said, adding that the rescue funds would have to be repaid as soon as possible.
Lufthansa, which said it would publish first-quarter results on June 3, said it is obvious that international air traffic will not bounce back to pre-crisis levels in the foreseeable future.
“The expected slow market recovery in global air traffic makes an adjustment of our capacities unavoidable,” said Chief Executive Carsten Spohr.
“Among other things, we want to discuss with our collective bargaining and social partners how the impact of this development can be softened in the most socially acceptable way possible.”
Lufthansa’s executive board will discuss the necessary measures with the Verdi, Vereinigung Cockpit and UFO unions, it said without elaborating.
Spohr told employees in late April that the carrier expects to operate 100 fewer aircraft with 10,000 fewer staff after the coronavirus crisis ends. The group has roughly 140,000 employees and 760 planes. ($1 = 0.8998 euros)
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Photo credit: Lufthansa is taking a big government bailout. Pictured is one of the airline's A350s. Lufthansa