|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||9.97 - 10.19|
|52 Week Range||7.65 - 20.22|
|Beta (5Y Monthly)||1.21|
|PE Ratio (TTM)||1.82|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||May 08, 2019|
|1y Target Est||4.60|
Lufthansa <LHAG.DE> is hoping for a quick nod from the European Commission for its 9 billion euro ($9.8 billion) bailout agreed on Monday to make sure the cash arrives in time for the company to stay afloat. Lufthansa's supervisory board is expected to meet Wednesday to sign off on the rescue deal and the invitation for an extraordinary shareholder meeting is expected shortly thereafter, the sources said. Lufthansa's owners need to agree to the bailout, which includes Germany taking a 20% stake in the carrier and the injection of 5.7 billion euros in non-voting capital.
(Bloomberg) -- Wuhan, the hub of China’s coronavirus outbreak, said it tested almost seven million people in 12 days, after several infections prompted worries about a second wave. Merck & Co. unveiled development plans for two vaccines, and the U.K. approved Gilead Sciences Inc.’s drug remdesivir in an early-access program.A U.K. government minister resigned in protest after Boris Johnson’s most senior aide refused to apologize for allegedly breaching lockdown rules, piling further pressure on the prime minister. The British government is planning to start lifting restrictions in June.Stocks rose on optimism that moves to ease lockdowns will help stabilize major economies. Latam Airlines sought bankruptcy court protection, Germany offered Lufthansa a $10 billion bailout and France is set to announce measures to support the auto industry.Key Developments:Virus Tracker: Cases top 5.5 million; deaths over 346,800Federal workers see risks to them in Trump’s push to reopenSingapore faces worst contraction in decades, unveils more aidVirus cracks Germany’s defense against unemployment surgeIndonesia deploys army, Thailand extends emergencyHedge funds plan extreme lengths after lockdownSubscribe to a daily update on the virus from Bloomberg’s Prognosis team here. Click VRUS on the terminal for news and data on the coronavirus. For a look back at this week’s top stories from QuickTake, click here.McLaren to Cut 1,200 Jobs to Reduce Costs (8:25 a.m. NY)The move will impact the applied technologies, automotive and racing businesses, as well as support and back-office functions, the British supercar maker said. The temporary closure of factories and showrooms, as well as the cancellation of motorsport events, abruptly cut off valuable revenue streams. Having already trimmed costs across the group, management is having to dig deeper for additional savings to help counter the financial impact of the pandemic.U.K. Clears Gilead Drug in Early-Access Program (8:05 a.m. NY)The U.K. approved using Gilead Sciences Inc.’s antiviral drug remdesivir for some patients hospitalized with Covid-19 after a study showed it can speed recovery. The Medicines and Healthcare Regulatory Agency cleared remdesivir under an early-access program. The drug was approved earlier this month in the U.S. under a similar emergency-use program.Xi Says China Security Affected by Virus (7:59 a.m. NY)The coronavirus has had a “profound impact” on China’s national security and development, President Xi Jinping said in an address to military delegates during the National People’s Congress in Beijing, state-run China Central Television reported. Xi reiterated that the military needs to strengthen training of troops and war preparations. The military and armed police must achieve targets in improving national defense, he said.Rare Blood Disorder Probed in South Korean Kids (7:52 a.m. NY)South Korean health authorities are investigating if two minors are suffering from a serious and rare inflammatory pediatric disease linked to the novel coronavirus. If confirmed, these could be the first reported cases in Asia of the blood disorder that has afflicted children in Italy and the U.S.One child is younger than 10 years old and the other is a teenager, Korea’s Center for Disease Control said. South Korea recently stepped up surveillance for this pediatric ailment after about 100 such cases were reported across Italy, New York and England. An Italian study earlier this month said the deadly pathogen may have triggered a 30-fold jump in the pediatric condition.Mexico Economy Slumps Most Since 2009 (7:34 a.m. NY)Mexico is on track for its worst recession in nearly a century even after data showed the economy contracted a little less than estimated in the first quarter. Gross domestic product in the three months through March fell 1.2% compared with the previous quarter. Economists surveyed by Bloomberg and and preliminary data released last month both had estimated a 1.6% drop in the period.On an annual, non-seasonally adjusted basis, GDP declined 1.4% during the quarter, compared with a 1.6% drop expected by economists. The slump captured only the beginning of the impact of a nationwide quarantine implemented to prevent the coronavirus from spreading. Economists estimate activity will plunge 7.6% this year, the most since the Great Depression.Hospital Staff With Covid-19 Had Antibodies (7:20 a.m. NY)Almost all doctors and nurses who got mild forms of Covid-19 produced antibodies that could prevent reinfection, according to a study in northeastern France. The study of 160 volunteers shows all but one developed antibodies within 15 days after the start of infection, Institut Pasteur and university hospitals in Strasbourg said in an early version of their findings released before peer review. Almost all staff tested had antibodies capable of neutralizing the virus within 41 days of developing symptoms.The research addresses a crucial question regarding the new coronavirus: whether people who had Covid-19, and especially those who didn’t get severely ill, develop antibodies capable of protecting them against reinfection. The World Health Organization said on April 24 that there’s no evidence yet that people who have recovered and have antibodies are protected from a second infection.“This finding supports the use of serologic testing for the diagnosis of individuals who have recovered from SARS-CoV-2 infection,” Institut Pasteur’s Arnaud Fontanet and colleagues wrote in the paper.Almost 96% of Fatalities in Italy Had Other Illnesses (7:10 a.m. NY)The coronavirus outbreak in Italy has struck overwhelmingly among the nation’s older population and those with preexisting medical conditions, according to the national health authority. Almost 96% of the country’s virus fatalities had previous medical conditions, data from Italy’s ISS health institute show.The ISS, which publishes a range of studies on the outbreak including a detailed weekly report, confirms a trend seen since the beginning of the emergency, with the average age of Italians who’ve died from the virus at around 80. “The latest numbers show that new cases and fatalities have a common profile: mostly elderly people with previous illnesses,” ISS chief Silvio Brusaferro said on Friday.Merck Advances Vaccine Candidates (6:45 a.m. NY)Merck & Co. moved to bolster the global fight against the coronavirus, unveiling development plans for a pill to the treat the infection and two vaccines to prevent it. The U.S. drugmaker bought rights to develop a promising antiviral discovered at Emory University and will work with partners to advance candidate vaccines based on the technology behind Ebola and measles immunizations.“This is a global pandemic. No one country can solve it, and we can’t put borders around any one country,” Chief Executive Office Kenneth Frazier said by phone. “If we’re successful, we want to ensure broad, supportable access for whoever needs it, wherever they are.” Merck, which over the past century has pioneered inoculations to stop diseases from diphtheria to Ebola, started researching ways to thwart Covid-19 and has evaluated hundreds of potential vaccines, Frazier said.Malaysia Cases Jump (6:24 a.m. NY)Malaysia recorded the biggest daily jump in new coronavirus cases since April 3 as it increased testing on migrant workers. The country confirmed 187 new cases on Tuesday, of which 173 are from immigration detention centers, according to the health ministry. That raised the total to 7,604 infections while the number of deaths remained at 115.The jump in cases comes three weeks after Malaysia relaxed lockdown measures and sparks concern of a surge in cases among migrant workers which many industries rely on for cheaper labor, including construction, restaurants and plantations. The country reported 172 new cases on Monday, after daily increases stayed below 100 for more than three weeks.U.K. Retail Sales Plunge (6 a.m. NY)Sales at clothing and furniture shops, as well as car showrooms, plunged again in May, according to the Confederation of British Industry. Its survey also revealed that 80% of firms are having cash-flow difficulties, and about half of retailers have temporarily laid off staff. The figures come a day after Prime Minister Boris Johnson laid out a timetable for the reopening of stores over the coming weeks.Outdoor markets and car showrooms will be able to reopen from June 1, as soon as they are able to meet the coronavirus guidelines to protect shoppers and workers. All other non-essential retail outlets including shops selling clothes, furniture, books, and electronics, will be expected to be able to reopen from June 15 if the government can control the spread of the virus.DWS to Keep London, U.S. Staff at Home (5:58 p.m. HK)Deutsche Bank AG’s asset management unit, DWS Group, will keep employees in London, New York City and Chicago at home for the time being amid ongoing concerns about the spread of Covid-19 and the need to use public transportation to get to the office.At its headquarters in Frankfurt, about a fifth of staff is expected to return to the office by the end of June, Chief Executive Officer Asoka Woehrmann said in an interview Monday. Employees in Asia have already started to come back to the office, with staffing expected to reach about one-third of pre-crisis levels in the near future, he said.European Travel Stocks Soar (5:40 p.m. HK)European travel stocks rallied following a report saying Germany aims to lift travel warnings for 31 European countries from June 15, adding to news from the weekend of Spain’s plans to restart tourism in the country. The Stoxx European travel and leisure index jumped as much as 7% to the highest level since April 30, driven by gains for airlines, airport operators and hoteliers.Deutsche Presse-Agentur reported that Germany’s travel warnings are to be lifted for all European Union members, along with the U.K., Norway, Iceland, Switzerland and Liechtenstein. The report said the warnings will be replaced by more detailed travel advice, citing a draft proposal. The government press office and the foreign ministry did not immediately respond to a request for comment.U.K. Minister Quits as Johnson Refuses to Fire Aide (4:55 p.m. HK)A U.K. government minister resigned in protest after Boris Johnson’s most senior aide refused to apologize for allegedly breaching lockdown rules, deepening the crisis engulfing the British leader’s inner circle. The resignation piled further pressure on Johnson to fire Dominic Cummings, his top strategist, who has refused to quit over claims that he flouted the government’s lockdown advice.The main charge against Cummings is that he ignored the government’s own orders to “stay at home” when he drove more than 250 miles (400 kilometers) to his parents’ property in northeast England to get childcare support for his four-year-old son. Douglas Ross, a junior minister for Scotland, said many voters in his district could not understand Cummings’ actions.England & Wales Deaths 54,000 Above Average (4:49 p.m. HK)Since the epidemic escalated after March 14 there have been about 54,000 more deaths registered than the average, significantly more than those attributed to the virus. Some Covid-19 linked deaths may not have been recorded, while the pressure the pandemic has put on medical resources may also be causing fatalities from other causes, according to research by the Continuous Mortality Investigation.Britain has been one of the world’s worst affected nations by the virus, with the highest official death count in Europe, though methods of reporting vary.Wuhan Tests Nearly Seven Million People (4:46 p.m. HK)Wuhan, the hub of China’s coronavirus outbreak, said it tested nearly seven million people in 12 days, concluding a campaign to test the entire population after several infections prompted fears of a second wave. A total of 6.68 million people underwent nucleic acid tests, of which 206 asymptomatic cases were reported, according to Bloomberg calculations.Wuhan’s mass testing campaign is part of China’s efforts to prevent the resurgence of the epidemic at all costs after it shut down large swathes of the world’s second-largest economy to get it under control. The emergence of a new cluster of cases in its northeast region led officials to lock down some 100 million residents.The ambitious testing mission was announced on May 12, days after new infections emerged for the first time since a 76-day lockdown was lifted in Wuhan in April. The pace of testing increased rapidly over the course of the campaign, with the city offering tests to over 1.1 million people on May 23, more than 26 times the number that were completed on the first dayEU Ends Export Curbs on Protective Gear (4:18 p.m. HK)The European Union removed controls on the export of personal protective equipment for fighting the coronavirus. The export restrictions on spectacles and visors, mouth-nose equipment and garments such as gowns lapsed on Tuesday after being introduced in mid-March for six weeks and then prolonged for 30 days to help ensure sufficient supplies within the EU.The trade limits -- in the form of a requirement for an authorization to sell the gear outside the 27-nation bloc -- initially also applied to face shields and gloves, which were excluded when the measures were prolonged in late April.Singapore Boosts Virus Relief (3:47 p.m. HK)Singapore’s Finance Minister Heng Swee Keat delivered a fourth fiscal package worth S$33 billion ($23 billion) to counter the economic fallout of the coronavirus, providing specific support to saving jobs.The latest measures will help businesses and workers affected by border closures and movement restrictions, Heng said in a Parliament session on Tuesday. The new package takes Singapore’s total support to almost S$100 billion, or about 20% of gross domestic product, Heng said. It comes with the economy headed for its worst contraction in Singapore’s history as an independent country.Thai Government Extends Emergency (3:45 p.m. HK)Thailand’s military-backed government extended the country’s state of emergency for a second time, to the end of June, despite opposition calls to scrap it after novel coronavirus cases dwindled.The step is needed to lower the risk of another wave of illness as a lockdown is eased, spokeswoman Narumon Pinyosinwat said after the Cabinet backed the move. The emergency imposed late March gives Prime Minister Prayuth Chan-Ocha sweeping powers, including a ban on large gatherings that prevents anti-government protests of the kind seen before the virus hit.Russian Deaths, Recoveries Spike (3:43 p.m. HK)Russia had a record 174 deaths from coronavirus over the past day, taking total fatalities in the country to 3,807. Figures showed recoveries also increased to 12,331, the highest number so far, bringing the total to 131,129.The number of new cases increased by 8,915, or 2.5%, to 362,342 -- this is slightly below the five-day average increase of about 2.7%.Denmark Faces Less Economic Pain Than EU (3:22 p.m. HK)Denmark’s economy will contract less than the European Union on average this year, after it eased restrictions on movement earlier than many other countries. Gross domestic product will shrink 5.3% in 2020, the Finance Ministry in Copenhagen said on Tuesday, according to documents seen by Bloomberg before the official publication. By contrast, the European Union is set to contract more than 7%.German New Cases Decline (1:26 p.m. HK)Germany recorded a decline in the number of new coronavirus cases, while the infection rate dropped further below the key threshold of 1.0. The country had 272 new cases in the 24 hours through Tuesday morning, according to data from Johns Hopkins University. That compares with 342 infections the previous day and almost 7,000 at the peak of the outbreak in late March.The reproduction factor of the virus, known as R-naught, dropped to 0.83 on Monday from 0.94 the day before, according to the latest estimate from the Robert Koch Institute. Separately, Germany plans to lift travel warnings for 31 European countries as of June 15, DPA reported, citing a government draft.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The German government’s 9 billion-euro ($9.8 billion) bailout of Deutsche Lufthansa AG may cost the stricken carrier some valuable assets: Key flight slots at airports in Frankfurt and Munich.The European Commission wants Lufthansa to surrender the slots out of concern the aid will give the carrier unfair advantage over competitors, people familiar with the matter said.After weeks of talks, Germany on Monday offered Lufthansa a package of loans and equity investment to keep the carrier aloft through the coronavirus storm. Officials in Brussels are concerned the deal will distort competition and fuel lawsuits from competitors like Ryanair Holdings Plc, the people said. Approval of the deal could take several weeks, they said, asking not to be named discussing confidential deliberations.To compensate for the state help, the European Union’s executive arm also would like the airline to decrease the number of aircraft based in Germany, the people said. German Chancellor Angela Merkel told a meeting of conservative lawmakers the government would fight for Lufthansa to keep key slots, people familiar with the matter said.“The discussions with the European Commission are continuing at full speed,” German Economy Minister Peter Altmaier said Monday at a news conference in Berlin. “So far, we have managed to get approval from Brussels for all our aid requests during the corona crisis. How long it will take I cannot say, but the main point for us is that we want to achieve a good result.”Shares GainLufthansa shares advanced on Tuesday, building on Monday’s 7.5% gain in the wake of the deal. As of 2:33 p.m. in Frankfurt, the stock was up 6%. Still, it remains down 44% for the year.Analysts at Deutsche Bank AG said that while some of the terms of the German government deal were less punitive than expected, it would leave Lufthansa with high debt levels.Still, the cost of protection against a default by Lufthansa touched its lowest level in a month, according to Bloomberg data. Bonds were mixed, with a hybrid note due in 2075 rising 3.4 cents to 79.3 cents, while the senior note maturing in 2024 fell 1.9 cents to 91.6 cents.“Lufthansa still faces huge challenges, including the right-sizing of the company and difficult labor talks,” Societe Generale analysts Michael Kuhn and Sumit Mehrotra wrote in a note to clients. In addition to potential snags for the deal in Brussels, “the main profit driver, intercontinental traffic, will take a long time to recover.”Slots’ ValueAirport slots are a crucial currency for airlines, providing them with the ability to operate flights at popular times and to coveted destinations. It’s a commodity that EU regulators have often asked carriers to cede to smaller rivals when seeking approval for mergers, including during Lufthansa’s 2017 takeover of a unit of Air Berlin.While airport capacity is being under-used while Lufthansa and other airlines focus on survival, they will be back in demand once travel starts to recover.Like airlines the world over, Lufthansa has been struggling to stay afloat after the coronavirus punctured a decades-long aviation boom. The company plans to operate fewer aircraft when flights resume and is closing discount arm Germanwings to resize for what it warns could be years of depressed demand.The EU press office said it had no comment on the Lufthansa plan and was “in constant contact” with governments. It defended the need for “additional commitments to preserve effective competition” that are required for recapitalizations of more than 250 million euros to a company, according to an emailed statement.“This is important to preserve the level playing field in the single market post-coronavirus crisis to the benefit of all European consumers and companies,” the EU said.The Lufthansa package will be the first recapitalization to be weighed by the EU after it loosened rules this month that usually prevent governments from pumping money into favored firms. EU approvals for aid can be challenged and potentially overturned in the EU courts where Ryanair is also suing previous EU orders to allow airline aid.Ryanair vowed to carry out Chief Executive Officer Michael O’Leary’s threat to challenge the German bailout, saying it could “further strengthen Lufthansa’s monopoly-like grip” on the German air travel market.“Lufthansa can use this latest 9 billion euro subsidy from the German government to engage in below-cost selling on its short haul intra-EU routes and its long haul routes,” the company said in a statement. “How can airlines like Ryanair, EasyJet and Laudamotion be expected to compete with Lufthansa in the short-haul market to and from Germany?”EU officials are aware of the need for speedy approvals, said Margrethe Vestager, the bloc’s antitrust chief. Officials have been “working seven days a week around the clock” and at night “in order to make sure that things can be processed as fast as possible,” she told EU lawmakers on Monday.Austria, BelgiumThe German aid package unveiled on Monday involves taking an initial 20% stake in Lufthansa that could rise to a blocking minority of 25% plus one share in the event of a hostile takeover. The support also includes a 5.7 billion-euro investment via a so-called silent participation -- a debt-equity hybrid instrument that wouldn’t dilute shareholder voting rights. The state will also back a three-year loan of 3 billion euros.As well as approval from the European Commission, the plan needs sign-off from Lufthansa’s supervisory board, and shareholders will have to vote on the capital increase at a special meeting, likely to be held in late June.Lufthansa is also poised to receive some 2 billion euros in aid from Austria, Belgium and Switzerland, where the airline owns units.Swiss state credit guarantees worth 1.28 billion francs ($1.3 billion) have already been agreed. Spohr is set to speak with Austrian Chancellor Sebastian Kurz this week to finalize an aid deal totaling about 600 million euros, equally split between loans and equity, according to people familiar with the matter. The Belgian package will be about half the size of the Austrian, plan, according to local reports.The German package represents the biggest corporate rescue in the country during the pandemic crisis. It’s also the only one that involves a direct investment by Merkel’s government, but more may be coming. The government set up the 100 billion-euro fund to buy stakes in stricken companies as part of its effort to stabilize Europe’s largest economy.(Updates with Ryanair comments and updates shares starting in 6th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- In mid-March, the world as Deutsche Lufthansa AG had known it for close to seven decades unraveled in the space of a week.Italy’s government put the entire country into quarantine on March 9 as deaths from the coronavirus began spiraling out of control. Two days later, the U.S. announced sweeping travel restrictions from 26 European countries, cutting off the lucrative trans-Atlantic artery. Then on March 17, the German government issued an unprecedented global travel warning. Lufthansa, like much of the world’s airline industry, was indefinitely stuck on the ground, bleeding cash.Chief Executive Officer Carsten Spohr quickly understood that if he wanted to save the company where he had risen through the ranks since 1994, he’d need to ask for help. After Germany unveiled a 600 billion-euro ($654 billion) economic aid fund, Spohr addressed his 135,000 workers in a video message, saying that he’d started talks with the government about “active support as soon as that becomes necessary.”The German airline was uniquely equipped to pick up early warnings signs of the storm that would wreak havoc on the global economy. Early in the year, when the coronavirus looked like a local anomaly in a far-away province many people had never heard of, Lufthansa registered a growing stream of cancellations on its flights to China.By the end of January, Lufthansa’s operations center at Frankfurt’s sprawling airport decided to cancel flights to the mainland cities of Nanjing, Beijing, Shanghai, Shenyang and Qingdao. Soon, flights to Iran and Italy followed.Crisis ModeA month later, the executive board was in full crisis mode, canceling pilot training, offering unpaid leave and unleashing a wave of cost cuts. State aid, long considered an ignominy that Spohr had derided as a competition-distorting ghost from the past, suddenly looked inevitable.This story is an account of how Lufthansa and the German government reached a bailout accord, announced by Finance Minister Olaf Scholz on May 25. The 9 billion-euro package involves the state taking an initial 20% stake that could rise to a blocking minority of 25% plus one share in the event of a hostile takeover. The people familiar with the negotiations asked not to be identified discussing confidential deliberations. Officials at Lufthansa and the government declined to comment on the closed-door talks.An hour’s flight east from Frankfurt in Berlin, Chancellor Angela Merkel was confronted with an increasingly agitated debate inside her government as well as her own Christian Democratic Union about how to help the airline. Her grand coalition with the left-leaning Social Democratic Party has always been an exercise in compromise, and ideological fault lines were now breaking into the open. There was little question that Lufthansa should receive help -- after all, the company is a globally recognized German emblem and helps lubricate the country’s export machine.But from the get-go there was controversy inside the political factions over the conditions the state should attach to its support. Members of the SPD, including Finance Minister Scholz, sought direct control by taking a big stake and gaining seats on the supervisory board, the panel in Germany’s two-tiered corporate structure that signs off on all key executive decisions.Past BattlesMerkel and Scholz are both battle-hardened, having worked in government during the financial crisis more than a decade ago. One of the lessons from that episode was that the government needed some form of veto power in the running of a stricken company to ensure that shareholders weren’t on the hook for losses. It’s a view that emerged as a red line for Deputy Finance Minister Joerg Kukies, a key negotiator in the talks. Merkel and her entourage had learned the hard way how a bailout could backfire after the rescue of Commerzbank AG left the state under water with its stock holding.By the end of April, the first numbers were coming together inside the government. A state-backed bailout would likely require 9 billion euros in aid, and in return the government would gain a 25% stake as well as two seats in the supervisory board.For Spohr, it was an offer he desperately wanted to refuse. For much of last year, he had agitated that perennially ailing Alitalia should be freed from the cold grip of the Italian state. Besides, the CEO had just emerged from years of painful negotiations with belligerent pilots and cabin crew over pay and benefits, a battle that routinely flares up in the aviation industry and would almost certainly be much harder to wage with the state as an interfering voice on the board.Going RetroThat reservation was shared in parts of the government, where there was little appetite to wage battles with labor unions, a potential political minefield with general elections looming next year.Broad-shouldered and with an engaging personality, 53-year-old Spohr took over the controls at Lufthansa in 2014. As an assistant to then-CEO Juergen Weber, he had witnessed the privatization of the airline, the last phase of which was completed in 1997. Now, almost two decades later, Spohr was being forced to readmit the state as the biggest shareholder.While he had gained a reputation for a management style that at times bordered on the dictatorial, no one could doubt Spohr’s almost boyish passion for a company and industry that was now facing a period on life support.Spohr’s temper flared when William Willms, a company strategist entrusted by the CEO to negotiate with Berlin, reported back late in April that the SPD insisted on taking a 25% plus one share stake. Spohr decided to consider the nuclear option, ordering Lufthansa staff to start looking at insolvency proceedings if the two sides couldn’t reach an agreement.Air BerlinWith the collapse of Air Berlin Plc in late 2017 still fresh on everyone’s minds, there was little appetite in the government to witness the breakdown of the standard bearer of German aviation. Insolvency was not an option.And even within Merkel’s camp, there was growing unease about taking such a big stake in a company. Unlike France, Germany has long sought to rid itself of direct holdings in companies, and those that remain, including Deutsche Telekom AG and Airbus SE, have often been the source of tension with management.Spohr injected himself more directly into the rescue talks, shuttling between Frankfurt and Berlin, as well as Vienna, Zurich and Brussels, home to the local subsidiaries Lufthansa had bought up over the years to turn into the continent’s leading aviation group.On April 29, he boarded a small Cessna Citation CJ1 for Vienna, where tense talks beckoned with Austrian Chancellor Sebastian Kurz and Finance Minister Gernot Bluemel. Spohr had little to offer on his five-hour trip, neither the hoped-for hard guarantees nor friendly words for Kurz, who sought assurance that the Vienna airport would remain a viable hub.Two weeks later, Spohr touched down in Brussels to meet Belgian Premier Sophie Wilmes, herself fighting to maintain confidence in her crisis management as her country experienced high death rates from the coronavirus. As he shuttled between cities, Lufthansa’s white jets with the blue tails remained parked in neat rows in Frankfurt and Munich, from the Airbus A320 city-hopper to the giant A380 super-jumbo now indefinitely immobilized, their engines sealed with red covers.The Lufthansa CEO sought out some of Merkel’s more liberal-minded parliamentarians to win backing for his case against the government taking a direct stake with veto powers. Merkel herself made a point of delegating much of the negotiations to Scholz and Economy Minister Peter Altmaier, a trusted aid who had previously been her chief of staff at the chancellery.But while she kept her distance in public, Merkel was on top of all the financial details. The conundrum facing the chancellor: how to forge a deal that supports Lufthansa without politicizing its business decisions. Proponents of a 25% stake also saw such a holding as a possible shield against an unwanted takeover.Brewing ProtestOn May 4, members of the CDU’s pro-business wing protested against Altmaier’s and Scholz’s plan for a direct government stake. As an alternative, Thomas Heilmann, a close ally of Merkel, drafted a paper introducing the idea of using convertible loans instead.Merkel realized that the resistance brewing in her caucus group put the entire Lufthansa aid project at risk, and she ordered Altmaier to reopen negotiations with the finance ministry to seek an alternative approach.For the government, there was also the European dimension to consider. Already, rivals were up in arms by what they considered a blatant display of state intervention. Ryanair Holdings Plc CEO Michael O’Leary, never one to mince words, called Lufthansa “the drunken uncle at the end of a wedding, drinking from all the empty glasses.”Ryanair has vowed to challenge the expected European Commission approval for the Lufthansa aid package, after already seeking to topple France’s $8 billion rescue of Air France.With the state’s position locked between interventionist hard-liners and proponents of government neutrality, Merkel instructed her ministers to go back to the drawing board and find ways of owning a lower active stake, making a deal with Lufthansa possible. There was little time to lose. Already on April 24, the airline had issued a dire warning, saying that it risked running low on cash within weeks, with no option to raise fresh funds in the capital market.Job CutsNow, almost a month on and with most of the 763 jets still on the ground, the situation was increasingly desperate. Other airlines were taking harsh measures. British Airways parent IAG SA announced 12,000 job cuts, and Emirates, the world’s largest long-haul carrier, is considering as many as 30,000 reductions, according to people familiar with the plans. Ryanair plans to eliminate 3,000 pilot, cabin-crew and office jobs, with remaining staff taking a 20% salary cut.Spohr sounded increasingly concerned that the company would run out of road before a bailout fell into place. On May 19, the CEO again wrote to staff warning that state aid was ever-more urgent, coupled with a plea for a deal that wouldn’t clip the carrier’s wings in competition. Spohr also braced colleagues for a diminished Lufthansa post-crisis, with hundreds of jets remaining grounded over the next years.The letter was directed in equal measure at the government in Berlin, where ministers and their deputies had finally managed to come around to a formula that sought to appease everyone. The trick was the introduction of a mechanism that would allow the government to raise its stake to a veto power should it become necessary, but otherwise remain at a 20% holding that limited its sway.Blinking FirstOn the evening of May 19, Merkel met with Altmaier and Scholz in her chancellery to reach a deal that all political factions could support and that Lufthansa would accept. The next day, officials made contact with Lufthansa to iron out the last details. From there, almost a week passed before the deal was announced, with the clearance still required from European competition authorities.In the end, Lufthansa got the aid that it desperately needed, but at the expense of turning back the clock on nationalization, with the state now by far the single-biggest shareholder. For the government, it’s a compromise between state intervention and giving key companies enough room to maneuver.Merkel’s RoleUltimately, Merkel prevailed by staring down Spohr’s threat of insolvency, letting the other side make the first move before piecing together a compromise that suited her best.Whether the deal will survive legal scrutiny brought on by the likes of Ryanair remains another uncertainty in the high-stakes negations. One thing that the government made clear is that its investment is finite, and that it plans to retreat again, ideally with a tidy profit, considering it picked up its stake at a steep discount.“When a state spends that much money, it has the obligation to make sure that this investment does not come at the taxpayers’ expense,” Scholz said after announcing the deal, the biggest aid package yet delivered by the government. But likely not the last.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Eurowings, the low-cost airline owned by Lufthansa <LHAG.DE>, said it would cut a third of the jobs at its headquarters as part of wider efforts to return the German airline group to profitability after a major state bailout. "We have around 1,000 staff at head office and of those we will reduce 300," Eurowings Chief Executive Jens Bischof told a briefing in Duesseldorf. Germany threw Lufthansa a 9 billion euro ($9.8 billion) lifeline on Monday, agreeing a bailout which gives Berlin a veto in the event of a hostile bid for the airline.
European markets rose on the bailout deal news, which sees Germany take a 20% stake in the firm.
Lufthansa may be forced to give up coveted slots at Frankfurt and Munich airports as the European Commission pushes to attach conditions to Germany’s €9bn bailout of the airline and rival Ryanair threatens to challenge the deal. As part of the rescue package, Berlin will take a 20 per cent stake in Europe’s second-largest airline, which was first privatised in 1997, with the option of increasing that to a blocking minority of 25 per cent, plus one share, in the event of a hostile takeover bid.
(Bloomberg) -- The daily rise is U.S. cases trailed the weekly average for a third straight day as coronavirus deaths inched closer to 100,000. Novavax Inc. started human tests of its coronavirus vaccine candidate.California is limiting attendance at church services to 100 people, and discouraging choir singing and potluck meals, while the Minneapolis mayor is worried about opening houses of worship.England will reopen some businesses beginning June 1. Dubai will start easing restrictions this week. Key Developments:Virus Tracker: Cases top 5.4 million; deaths over 344,000Brazil toughens beef export rules to avoid U.S.-style disruptionsSpaniards in face masks return to Madrid’s bars as crisis easesGold giant Australia fires up a record exploration boomSocial unrest is lurking in Chile as virus spreadsHertz says pandemic devastated revenue, leading to bankruptcyUsing computer simulations to find a Covid-19 treatmentSubscribe to a daily update on the virus from Bloomberg’s Prognosis team here. Click VRUS on the terminal for news and data on the coronavirus. For a look back at this week’s top stories from QuickTake, click here.U.S. Says 200 Million Tests Possible (5:55 p.m. NY)The Trump administration said sufficient quantities of Abbott Laboratories’ ID NOW Covid-19 test and Quidel Corp.’s Sofia 2 instruments exist to support 200 million U.S. tests per month.The Department of Health and Human Services, in a report to Congress, said 18,000 ID NOW devices and 20,000 Quidel instruments are available to states. The U.S. also is buying 100 million swabs and 100 million tubes of viral transport media to help states meet testing goals.“This large-scale acquisition reflects a significant expansion of current capacity,” according to the report, and reflects use of the Defense Production Act to increase swab manufacturing.Minneapolis Mayor Worried by Church Rules (5:30 p.m. NY)Minneapolis Mayor Jacob Frey said he is concerned by Minnesota state guidelines taking effect on Wednesday that let churches resume services, with limits on attendance and requirements to follow social-distancing measures.“A move up to 25% capacity and up to 250 people in places of worship is a recipe in Minneapolis for a public health disaster,” Frey said Monday on CNN. “That is not the route that we can or should be going on right now.”Novavax Starts Vaccine Study (4:35 p.m. NY)Novavax Inc. began human testing of its coronavirus vaccine candidate and anticipates providing a first look in July at what sort of immune responses are generated.In the first phase, 130 healthy adult volunteers at two sites in Australia will get two doses of NVX-CoV2373, the biotech’s experimental vaccine. If initial results look promising, the company plans to quickly move into the second phase -- expand testing to other countries and age groups outside of 18 to 59.The Gaithersburg, Maryland-based company is one of about 10 that are testing vaccines, according to the World Health Organization. Moderna Inc. reported the first Covid-19 vaccine results in humans last week.U.S. Cases Rose 1.3%, Less Than Week’s Average (4 p.m. NY)U.S. cases increased 1.3% from the same time Sunday to 1.65 million, according to data collected by Johns Hopkins University and Bloomberg News. The increase was below the average daily increase of 1.4% over the past week, and has the same for three days.Deaths rose less than 1% to 97,948 from 97,424 -- the smallest one-day increase in more than a week.New York had 1,249 cases, bringing the total to 362,764, and 97 deaths, for a total of 23,488, the health department said.New Jersey had 965 cases, for a total of 155,092, with 16 deaths, for a total of 11,144, Governor Phil Murphy said.Illinois reported 1,713 cases, for a total of 112,017, with 31 deaths, for a total of 4,884.California cases rose 1,848, or 2%, for a total of 94,558, while 21 deaths were added, a 0.6% rise, to 3,795.Pennsylvania added 473 cases, for a total to 68,186, and 15 deaths for a total of 5,139, the health department reported.Michigan reported 202 new cases for a total of 54,881, with 12 additional deaths for a total of 5,240.Connecticut added 405 cases, for a total of 40,873, with 49 new deaths, for a total of 2,742, Governor Ned Lamont said.California Sets Church Limits (3:45 p.m. NY)California will limit attendance in houses of worship to 25% of building capacity or 100 people and is discouraging choir singing, group recitations and passing of the collection plate.“Convening in a congregational setting of multiple different households to practice a personal faith carries a relatively higher risk for widespread transmission of the Covid-19 virus, and may result in increased rates of infection, hospitalization, and death, especially among more vulnerable populations,” according to the guidance.The state is also discouraging potlucks or similar family-style eating and drinking events that increase the risk of cross contamination.Denmark Funding Needs Triple (3:10 p.m. NY)Denmark needs more than $40 billion in financing -- more than triple its previous estimate -- to help pay for an historic set of emergency measures to fight the pandemic. The government will need to tap bond markets and its account at the central bank to generate the needed 294 billion kroner ($43 billion), the Finance Ministry said.AAA-rated Denmark has so far been able to tap markets at historically low rates. Its benchmark 10-year bond trades at a negative yield, and its entire yield curve up to 20 years traded below zero not that long ago.England to Reopen Showrooms, Stores (2:50 p.m. NY)England’s outdoor markets and car showrooms can reopen from June 1, as soon as they can meet guidelines to protect shoppers and workers, Prime Minister Boris Johnson said as he urged the public to spend money in stores when the curbs are lifted.All other non-essential outlets including shops selling clothes, shoes, toys, furniture, books and electronics, plus tailors, auction houses, photography studios and indoor markets, are on track to reopen June 15 if the government can control the spread of the virus, Johnson told a daily news conference. Scotland, Wales and Northern Ireland are on a different timetable determined by local administrations.U.K. cases rose to 261,184. The government reported 121 new deaths, up from 118 a day earlier, bringing the total to 36,914.France Deaths Rise (2:45 p.m. NY)France reported 90 new deaths on Monday, for a total of 28,457, with authorities failing to provide an update on nursing-home fatalities for a fifth day. Hospitalizations resumed their decline of the past five weeks, after an increase on Sunday. Total deaths reached 28,457, and 358 new cases brought the totals to 219,795.Dubai to Ease Limits Wednesday (2:20 p.m. NY)The emirate of Dubai will resume economic activities and ease lockdown restrictions starting Wednesday, the emirate’s media office said in a statement.Travel will be allowed from 6 a.m. to 11 p.m. local time. The airport will operate only for residents leaving Dubai, some clinics will reopen and elective surgeries that take up to 2 1/2 hours will be allowed, the statement said.Training academies, indoor sport venues, gyms and movie theaters will be open with social distancing in place.ECB’s Villeroy: More Stimulus Probable (1:30 p.m. NY)A key European Central Bank policy maker signaled the institution is very likely to boost its emergency bond-buying program to fight the pandemic.With inflation low, there is room to innovate and act “rapidly and powerfully,” Bank of France Governor Francois Villeroy de Galhau said in Paris. He also signaled he’d like more loosening of limits on the 750 billion-euro ($817 billion) plan.The ECB’s next policy meeting is June 4 and economists are increasingly forecasting that the central bank will use that session to add more stimulus.Pence to Meet College Chiefs (1:20 p.m. NY)Vice President Mike Pence said the White House task force and the Centers for Disease Control and Prevention are crafting information that will help schools and universities to open. Some university chiefs will meet soon at the White House, he said, without providing a date.“We’re working very closely with university presidents,” Pence said on “Fox & Friends.” “We have every confidence that whether it be our universities around the country or whether it be primary and secondary education that we’re -- in most areas of the country we’re going to be able to get kids back to school in a safe and responsible way.”Ireland Reports Zero New Deaths (1:10 p.m. NY)Ireland reported its first day without a death since March 21, with 59 new cases. “It’s part of the continued trend we’ve seen” of declining numbers, chief medical officer Tony Holohan said.The country has reported fewer than 100 new cases for nine of the past 10 days. It began lifting a nationwide lockdown a week ago. There have been 1,606 deaths so far, with 24,698 cases.Trump Optimistic on Baltimore Visit (12:50 p.m. NY)President Donald Trump visited Baltimore for a Memorial Day celebration at the fort linked to the national anthem, dismissing the mayor’s warnings to stay away as the city grapples with the pandemic.Baltimore Mayor Jack Young said the non-essential trip, which the White House said was to honor American service members killed in battle, sends “the wrong message” to residents sheltering at home.Trump didn’t directly address Young’s comments in remarks at Fort McHenry, but was optimistic about the fight against Covid-19, which has claimed almost 100,000 U.S. lives. “Together we will vanquish the virus and America will emerge from this crisis to new and even greater heights,” he said.Poland Deaths Top 1,000 (12:45 p.m. NY)Poland’s death toll topped 1,000 as of Monday, with the number of new cases remaining above 300 every day for the past two weeks. Coal mines and furniture factories remain the biggest source for infections. The Health Ministry data shows little progress with curbing the infections even as the government gradually lifts some restrictions.Poland was initially resilient to the outbreak, as a quick lockdown limited deaths compared WITH to Western Europe.WHO Halts Trial on Trump-Touted Drug (12:20 p.m. NY)The World Health Organization temporarily halted the hydroxychloroquine arm of its Covid-19 drug trials pending more data because of safety concerns.The WHO’s steering committee decided to suspend enrollment to part of the so-called Solidarity trial after a study in the Lancet said the drug, touted by U.S. President Donald Trump as a treatment, was linked to an increased risk of death and heart ailments.“It’s important to continue to gather evidence on the efficacy and safety of hydroxychloroquine,” WHO Chief Scientist Soumya Swaminathan said Monday in Geneva. The studies may resume if data warrants, Mike Ryan, head of the WHO’s health emergencies program, said at a briefing.N.Y. New Deaths Drop Under 100 (12:10 a.m. NY)New York had 96 new deaths, Governor Andrew Cuomo said on Monday, a drop from 109 reported a day earlier and not as low as the 84 registered on Saturday.Cuomo also said the families of front-line workers who died from Covid-19 would be eligible for death benefits, saying such employees did their jobs despite the risks.“They showed up because I asked them to show up, they showed up because I required them to show up,” Cuomo said at his daily briefing at the Intrepid Sea, Air & Space Museum on the Hudson River.Montenegro to Reopen Borders (12:05 p.m. NY)Montenegro will open borders June 1 without restrictions for visitors from nine countries -- Croatia, Slovenia, Poland, Austria, Germany, Albania, Czechia, Hungary and Greece, but not with immediate neighbors Bosnia-Herzegovina and Serbia, Premier Dusko Markovic told reporters in capital Podgorica. The list will be expanded with more states where cases drop to under 25 per 100,000 people, he said.Putin Spokesman to Isolate (11:55 a.m. NY)The spokesman for Russian President Vladimir Putin said he was released from the hospital after a bout with Covid-19, the latest senior Kremlin official to recover. Dmitry Peskov said by text message he will spend the next two weeks self-isolating at home.Last week, Russian Prime Minister Mikhail Mishustin returned to work after recovering from the illness. Three government ministers and at least five State Duma deputies have been diagnosed with the virus.Russia’s infections rose 2.4% in the past day to 353,427, with deaths reported up 92 to 3,633. Russia now ranks third in cases, after Brazil’s infections spiked over the weekend.U.K. Aide Won’t Quit Over Breach (11:50 a.m. NY)Dominic Cummings, one of Boris Johnson’s closest allies, refused to quit his job in the U.K. government, refuting claims he flouted lockdown rules that he had helped to draft.“I don’t regret what I did,” Cummings, 48, told reporters at Johnson’s residence. “I believe I made the right judgment though I understand that others may disagree with that.”Cummings spoke after newspapers reported he drove more than 250 miles to northeast England in early April to seek family support for his 4-year-old son, after his wife contracted Covid-19 and he began showing symptoms. Local police said they are investigating whether Cummings had broken lockdown rules after a retired teacher said he saw Cummings at a spot 30 miles away from his parents’ home.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Germany is still in talks with the European Commission over its rescue package for flagship carrier Lufthansa, Economy Minister Peter Altmaier said on Monday, adding that Berlin expected Brussels to give the green light for the bailout. Germany on Monday threw Lufthansa a 9 billion euro ($9.81 billion) lifeline, agreeing to a bailout which gives Berlin a veto in the event of a hostile bid for the airline.
Deutsche Lufthansa AG (DLAKY) on Monday announced that it has reached an agreement with the German government on a €9 billion ($9.8 billion) bailout package.As part of the bailout package, the German government will get a 20% stake in the ailing German carrier. In the event of a takeover of the airline, the government may also increase its stake to 25% plus one share.Commercial airline travel has fallen off a cliff due to coronavirus-induced lockdown restrictions forcing many global airlines around the world to ground the majority of their fleets, suspend aircraft deliveries, streamline operations and ask their governments for financial aid packages. U.S. airlines including American Airlines (AAL), United Airlines (UAL) and Delta Air Lines (DAL) have also sought state aid.In addition, the German government, which is buying new shares at the nominal value of 2.56 euros per share for a total of about €300 million, will be committed to sell its shareholding in full at the market price by the end of 2023.The terms of the rescue package will require Lufthansa to waive future dividend payments and limit management remuneration. Moreover, two seats on the Supervisory Board are to be filled in agreement with the German government, one of which is to become a member of the Audit Committee.The bailout package is still subject to the approval of the airline’s Management Board and the Supervisory Board as well as the European Commission and any competition-related conditions.Separately, Lufthansa said it will receive a syndicated three-year credit facility of up to €3 billion with the participation of state-backed KfW and private banks.Since the beginning of this year, the value of Lufthansa shares has more than halved trading at $8.82 in the U.S. as of the close on Friday.In view of the uncertainty related to the duration of the coronavirus pandemic coupled with a slow recovery in air travel demand, the average analyst price target stands at $6.21, indicating 30% downside potential in the shares in the coming year. The overall consensus rating on the stock remains a Moderate Sell. Related News: Ryanair Cuts Traffic Target By Almost 50% For Coming Year, Seeks To Reduce Boeing Plane Deliveries Boeing Gets No Orders in April, Customers Cancel 737 MAX Jets Colombian Carrier Avianca Files for Bankruptcy Protection Due to Coronavirus Woes More recent articles from Smarter Analyst: * Merck Joins Race For Covid-19 Vaccine; Shares Rise 4.4% in Pre-Market * Texas Capital CEO Resigns As Independent Bank Merger Terminated; Analyst Downgrades Stock * Aurinia Submits FDA New Drug Admission For Novel Voclosporin Kidney Treatment * China’s Tencent To Pour $70B Into ‘New Infrastructure’ Including AI
German airline said it has received approval for a multibillion-dollar “stabilization package” from a government support fund to keep the company going through the turbulence from the coronavirus outbreak, but cautions the deal has not been approved by the European Union’s executive commission.
(Bloomberg) -- Germany will offer Deutsche Lufthansa AG a 9 billion-euro ($9.8 billion) bailout that thrusts the state back into the heart of a company privatized with fanfare two decades ago.The aid package involves taking an initial 20% stake that could rise to a blocking minority of 25% plus one share in the event of a hostile takeover, the carrier said in a statement on Monday. The plan, which requires European Union approval and will almost certainly be challenged by rival airlines such as Ryanair Holdings Plc, gives Germany an effective veto over company strategy.German Finance Minister Olaf Scholz said the state’s investment would be temporary, but he also stressed that the timing of an exit would depend on the pace of Lufthansa’s economic recovery.“When a state spends that much money, it has the obligation to make sure that this investment does not come at the taxpayers’ expense,” Scholz said.Like airlines the world over, Lufthansa is fighting for survival as restrictions to contain the coronavirus puncture a decades-long aviation boom. The company plans to operate fewer aircraft when flights resume and is closing discount arm Germanwings to resize for what it warns could be years of depressed demand.The package represents the biggest corporate rescue in Germany during the pandemic crisis. It’s also the only one that involves a direct investment by Chancellor Angela Merkel’s government, but more may be coming. The government set up the 100 billion-euro fund to buy stakes in stricken companies as part of its effort to stabilize Europe’s largest economy.As part of the deal, the government will pay about 300 million euros for new Lufthansa stock at the discount price of 2.56 euros, the nominal value of its shares on the balance sheet. Lufthansa shares, which have nearly halved this year, closed at 8.64 euros in Frankfurt trading.The deal also includes a 5.7 billion-euro investment via a so-called silent participation -- a debt-equity hybrid instrument that wouldn’t dilute shareholder voting rights. The company will pay a guaranteed dividend on the investment of 4% in 2020 and 2021, rising to 9.5% in 2027. A portion of the silent participation can be turned into 5% of Lufthansa’s stock if the company doesn’t pay the guaranteed dividend, according to the statement.The state will also back a three-year loan of 3 billion euros.The government aims to sell its stake by the end of 2023. Exiting the holding depends on Lufthansa repaying the aid and the share price being above the purchase price plus interest.Merkel’s government has been eager to avoid losses suffered on bank bailouts after the 2008 financial rout, while safeguarding links to far-flung markets on which the export-led economy depends.Lufthansa had already secured aid from Switzerland for its unit there in the form of credit guarantees worth 1.28 billion Swiss francs ($1.3 billion) and is negotiating separate packages for divisions in Austria and Belgium.As part of the bailout, Germany isn’t allowed to interfere in day-to-day operations but will get to fill two seats on Lufthansa’s supervisory board. The representatives will be “independent experts” rather than government officials, a point of contention as the company pushed back against state influence.While Lufthansa’s management board accepted the offer, the company’s supervisory board will debate and vote on the package before asking shareholders to do the same at an extraordinary general meeting. Europe’s largest airline last week warned that it required “urgent” assistance after the fallout from the coronavirus grounded most of its fleet.As part of the deal, Lufthansa will continue to reduce its per kilometer emissions by investing in cleaner aircraft and buying alternative fuels where possible, according to the Finance Ministry statement. Lufthansa’s total greenhouse gas emissions rose to a record last year as improvements in fuel efficiency were overshadowed by an increased number of flights, according to the firm’s 2019 sustainability report.(Updates with finance minister comment, chart on German bailouts, deal details)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Germany's new Economic Stabilization Fund (WSF) has approved a 9 billion euro ($9.80 billion) stabilization package for Lufthansa <LHAG.DE>, Germany's flagship carrier said on Monday. "The Executive Board also supports the package", Lufthansa said, adding that the bailout still need consent from shareholders as well as the European Commission. The WSF plans to sell its shareholding by end-2023.
(Bloomberg) -- Germany will offer Deutsche Lufthansa AG a 9 billion-euro ($9.8 billion) bailout that thrusts the state back into the heart of a company privatized with fanfare two decades ago.The aid package involves taking an initial 20% stake that could rise to 25% plus one share in the event of a takeover, according to a statement on Monday. The plan, which requires European Union approval and will almost certainly be challenged by rival airlines such as Ryanair Holdings Plc, gives German officials an effective veto over company strategy.While Lufthansa fought for weeks to limit government influence, its management board is expected to approve the deal quickly before asking the firm’s supervisory board to vote on it, according to people familiar with the matter. Europe’s largest airline last week warned that it required “urgent” assistance after the fallout from the coronavirus grounded most of its fleet.The package represents the biggest corporate rescue in Germany during the pandemic crisis. It’s also the only one that involves a direct investment by Chancellor Angela Merkel’s government, but more may be coming. The government set up the 100 billion-euro fund to buy stakes in stricken companies as part of its effort to stabilize Europe’s largest economy.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Germany is close to making a formal offer to bail out Deutsche Lufthansa AG even as talks to ensure swift approval from the European Union drag on, according to people familiar with the matter.The committee that manages Germany’s WSF Economic Stabilization Fund is set to meet later on Monday to discuss a 9 billion-euro ($9.8 billion) aid package, a person familiar with the matter said. The meeting -- delayed repeatedly in recent days -- is an indication that Germany is prepared to formalize an offer, though the situation remains delicate.The German government and Lufthansa have reached an agreement in principle on a bailout package, German news agency DPA reported Monday, without citing the source of the information. An economy ministry spokeswoman later told a regular news conference that talks are in the “end phase.” A spokeswoman for Lufthansa declined to comment.Chancellor Angela Merkel’s administration had aimed to issue a formal offer to the airline this past weekend, but talks between Germany, Lufthansa and the European Commission have held up the plan, said the person, who asked not to be identified because the talks are confidential.While Lufthansa fought for weeks to limit government interference, its management board is expected to approve the deal quickly before asking the firm’s supervisory board to vote on it, according to people familiar with the matter. The airline last week warned its need for assistance was “urgent” after the coronavirus crisis grounded most of its fleet.Exit PlanA timetable for the German government to sell an eventual stake in Lufthansa is one of the details that still needs to be ironed out, said the person. The discussions are complicated because competitors have vowed to challenge the aid package for Europe’s largest airline.The basis of a rescue deal came together last week as Germany seeks to rescue its flag carrier from the fallout of the pandemic. Under the plan, Germany would become the largest shareholder in the airline, which plans to resize for what Lufthansa warns could be years of depressed demand.The company’s shares rose as much as 8.1% to 8.69 euros and was up 5.1% at 12:46 p.m. in Frankfurt trading. The stock has nearly halved this year, valuing the company at 4.1 billion euros.In talks with the EU, the pace of repaying the aid is also an issue. Lufthansa would face a three-year deadline for paying back the bailout package, Bild am Sonntag reported on Sunday. That’s a faster rate than one implied by the company. Chief Executive Officer Carsten Spohr has previously said the company is expected to reimburse as much as 1 billion euros a year.Silent ParticipationThe German aid package would include a 20% direct government stake in Lufthansa, a convertible bond equivalent to a 5% plus one share and a 3 billion-euro loan from state development bank KfW.There’s also plans for a so-called silent participation -- a debt-equity hybrid instrument that wouldn’t dilute shareholder voting rights. The securities have relatively high guaranteed dividends, while lacking voting rights and the potential upside from share gains.In the Lufthansa deal, the German state’s direct holding is for stock with a nominal price of 2.56 euros, a level that all but guarantees a taxpayer profit if the state props up the airline. The parties are also discussing a capital-cut option that would see the company issue shares below that price, Lufthansa said in a statement last week.Under EU state-aid guidelines loosened this month to help alleviate the economic damage of the coronavirus crisis, member states should scale down stakes they buy in listed companies within six years. The EU’s competition unit also banned payouts like dividends and bonuses for top executives, while barring companies from taking more than a 10% stake in rivals, suppliers or customers.German Economy Minister Peter Altmaier said in an interview on Saturday that an exit strategy must be part of the plan. Lufthansa is also poised to receive assistance from Switzerland, Austria and Belgium, where it owns units.Ryanair ChallengeGovernments can set stricter conditions on aid to limit potential harm to rivals who don’t get similar help. Ryanair Holdings Plc has already challenged the bailout of Air France-KLM and vowed to do the same with Lufthansa, complaining that the German flag-carrier would exit the crisis stronger while lower-cost airlines that don’t get aid will compete “with two hands tied behind our back.”The European Commission declined to comment, referring to an earlier statement that regulators were in constant contact with national governments and were “very well aware of the difficult situation that the aviation sector is facing due to the coronavirus outbreak.”But the commission has also warned in recent weeks of growing divergence within Europe as Germany accounts for more than half the 1.95 trillion euros in Covid-19 state aid approved by EU regulators.(Updates with economy ministry comment in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Germany threw Lufthansa a 9 billion euro ($9.8 billion) lifeline on Monday, agreeing a bailout which gives Berlin a veto in the event of a hostile bid for the airline. Lufthansa has been locked in talks with Berlin for weeks over aid it needs to survive an expected protracted travel slump, with the airline wrangling over how much control to yield in return for financial support. Germany's central government has spent decades offloading stakes in companies, but remains a large shareholder in former state monopolies such as Deutsche Post and Deutsche Telekom.
Lufthansa is to receive a rescue package worth a total of €9bn from the German government, which will own at least a fifth of the national carrier almost a quarter of a century after it was fully privatised. The country’s Economic Stabilisation Fund, set up to cushion the impact of the Covid-19 pandemic on German businesses, will pay €300m to buy new shares in the Frankfurt-based group at the nominal price of €2.56 a piece, bringing its stake to 20 per cent and diluting existing investors. The German government has committed not to exercise its voting rights in day-to-day matters, and plans to sell its stake by the end of 2023.
The largest German corporate rescue since the crisis struck will see the government get a 20% stake in carrier Lufthansa. The 9 billion euro, or 9.8 billion dollar stake could rise to 25% plus one share in the event of a takeover attempt. Lufthansa and Berlin have been locked in talks for weeks in an attempt to save thousands of jobs. Germany's Finance Minister Olaf Scholz said on Monday (May 25) that until now, Lufthansa had been healthy and profitable: "The efforts that we are undertaking are limited to a certain timeframe. Once the company has got its footing again then the state will sell its shares with what I hope will be - and not only because I am finance minister - a small profit which will then allow us to finance the many, many obligations we now need to fulfill with other companies that need us." Berlin, which has set up a 100 billion euro fund to take stakes in struggling companies, said it plans to sell its share in Lufthansa by the end of 2023. Lufthansa will separately receive a 3-billion-euro three-year loan from state-backed KfW and private banks. The bailout still requires approval by shareholders as well as the European Commission. But shares were up over six percent on Tuesday (May 26) morning, following a public holiday for most of Europe. The major travel slump has left even the strongest airlines struggling. Others including Air France-KLM and U.S. carriers American Airlines, United Airlines and Delta have also sought state aid.
May.26 -- Germany will offer Deutsche Lufthansa AG a $9.8 billion bailout that includes the nation taking an initial 20% stake in the airline. The plan is subject to approval by the European Union. Bloomberg’s Benedikt Kammel reports on "Bloomberg Markets: European Open."
Germany's rescue package for flagship carrier Lufthansa is a "very, very good solution" that is taking into account the needs of both the company and taxpayers, Finance Minister Olaf Scholz said on Monday. "The support that we're preparing here is for a limited period of time," Scholz said after government and Lufthansa reached a preliminary deal on a 9 billion euro ($9.8 billion)bailout. "When the company is fit again, the state will sell its stake and hopefully ... with a small profit that puts us into a position to finance the many, many requirements which we have to meet now, not only at this company," Scholz added.
Chancellor Angela Merkel told senior members of her party that the German government would not allow the European Commission to deprive Lufthansa of valuable take-off and landing slots at Frankfurt and Munich airports, Handelsblatt reported. Lufthansa and the competition watchdog are discussing which slots at which airports Lufthansa will have to waive as a remedy to ensure competition is not hampered by the bailout, a person familiar with the matter told Reuters.
May.25 -- Germany’s 9 billion-euro ($9.8 billion) bailout of Deutsche Lufthansa AG is being slowed by discussions meant to ensure the rescue plan receives swift European Union approval once it’s finalized, people familiar with the matter said. Benedikt Kammel reports on "Bloomberg Markets: European Open."
Lufthansa <LHAG.DE>, which is in talks with the German government over a 9 billion euro ($9.8 billion) bailout, will resume flights to 20 destinations from mid-June, including some holiday hot-spots, a spokeswoman said on Sunday. The destinations include Mallorca, Crete, Rhodes, Faro, Venice, Ibiza and Malaga, the spokeswoman said, adding flights would depart from the airline's main hub in Frankfurt. Further destinations will be unveiled at the end of next week, she said.