|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||10.10 - 10.44|
|52 Week Range||7.65 - 20.22|
|Beta (5Y Monthly)||1.21|
|PE Ratio (TTM)||1.84|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||May 08, 2019|
|1y Target Est||N/A|
(Bloomberg) -- The German government worked out its differences with the European Commission over a 9 billion-euro ($9.9 billion) bailout of Deutsche Lufthansa AG, clearing the way for the rescue of Europe’s biggest airline to move forward.After intense talks, the commission and the German government agreed that Lufthansa will reduce its presence at airports in Frankfurt and Munich by four aircraft each. The accord, which the airline’s management said it would accept, would give a toehold to new competitors hoping to challenge the dominant German carrier on its home turf.The compromise settles a high-stakes showdown that played out over the past week, pitting the European Union’s most powerful member state against the regulator tasked with ensuring fairness in the bailout process. The economic damage of the coronavirus crisis has unleashed an unprecedented gusher of state aid, led by Germany’s 600 billion-euro ($666 billion) effort to shore up its economy.With Lufthansa’s future in the balance, Germany on Monday offered Lufthansa a package of loans and equity investment to keep the carrier aloft. But after the EU demanded it give up slots in Munich and Frankfurt, the airline’s supervisory board unexpectedly held off on accepting this lifeline -- throwing the rescue plan into turmoil after weeks of talks.The concessions are “not insignificant” for Lufthsansa, said Stephen Furlong, an analyst with Davy Stockbrokers in Dublin.The agreement still requires approval of Lufthansa’s supervisory board, followed by a formal signoff by the EU, which polices state aid to ensure one country doesn’t give its companies an unfair advantage.Assessing the DealThe bloc’s regulators will then assess the German aid package “as a matter of priority,” the EU said Saturday.A spokeswoman for Germany’s economy ministry said an important milestone had been reached, adding talks with the EU over other aspects of the deal would continue.Lufthansa said in a statement that it would surrender as many as 24 takeoff-and-landing slots at Munich and the same at Frankfurt -- enough for a competitor to base four planes doing three daily round-trips. This reflects a reduction in the initial demands from the EU, it said.The commitments will “enable a viable entry or expansion of activities by other airlines at these airports to the benefit of consumers and effective competition,” the European Commission said in an emailed statement.There are significant catches, however, that suggest the strongest potential beneficiaries, such as Ryanair Holdings Plc -- a loud critic of the Lufthansa aid -- won’t be able to fully take advantage of the slots.For the first 18 months, the capacity is reserved for new competitors in Frankfurt and Munich. With the global airline industry in retreat, the likelihood of a fresh entrant may be limited.Of the two main European discount carriers, Dublin-based Ryanair already has slots at Frankfurt’s main airport. U.K.-based Easyjet Plc has a presence in Munich. Each would be unable to use the new capacity in the location where it’s already planted a flag.Another European low-cost carrier, Wizz Air Holdings Plc, has signaled it’ll seek to expand during the crisis. But it recently pulled out of Frankfurt after a three-year stint with flights to Sofia, Bulgaria, Budapest, Hungary, and Kyiv in the Ukraine.The slot pairs will be allocated in a bidding process, Lufthansa said, and only be available to European carriers that haven’t received substantial state recapitalization due to the coronavirus pandemic.Faceoff Over SlotsThe supervisory board’s rejection of the initial rescue proposal had triggered an open dispute between the German government and the EU commission, revealing the political tensions underpinning the effort to stabilize Europe’s largest airline in the midst of a historic collapse in travel.The labor-heavy supervisory board saw a threat that jobs would be lost and the market would shift toward the discount airlines, which pay their personnel less.Still, all sides were seeking a breakthrough. Even before the compromise, the board had called the bailout “the only viable alternative for maintaining solvency.”Read more: Vestager Defends Tough Stance on Lufthansa Amid Jobs WarningBailout-or-Bust Dilemma Forces Lufthansa to Call in State RescueMerkel Is Seizing Her Chance to Revolutionize Germany’s Economy“Lufthansa is indeed a very impressive company and they have market power,” EU competition watchdog Margrethe Vestager told reporters in Brussels on Friday. “There is a high risk that if you hold market power” that “competition will be disturbed,” especially when state recapitalizations strengthen a company.The supervisory board wasn’t planning to meet this weekend, but could be called to do so at short notice, people familiar with the matter have said. It may meet on Monday, German newspaper Handelsblatt reported.Shareholder VoteLufthansa’s shareholders would also be called to vote on a proposed capital increase that’s part of the rescue plan at an extraordinary general meeting, most likely toward the end of June, meaning it could be weeks before Lufthansa receives government cash.Like airlines across the world, Lufthansa is fighting for survival as the coronavirus crisis punctures a decades-long aviation boom. The company, which connects Germany’s industrial titans to far-flung export markets, plans to operate fewer aircraft when flights resume and is closing discount arm Germanwings to prepare for what could be years of depressed demand.Lufthansa is also poised to receive some 2 billion euros in aid from Austria, Belgium and Switzerland, where the airline owns units.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 German Chancellor Angela Merkel’s government, but more may be coming. The government set up a 100 billion-euro fund to buy stakes in stricken companies as part of its effort to stabilize Europe’s largest economy.(Updates with analyst’s comment in fifth 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) -- Brazil overtook Spain to rank fifth in the world in coronavirus deaths, with no sign of easing in Latin America’s biggest economy. The U.S. will quit the World Health Organization after President Donald Trump faulted its actions with China and the virus.A front-running vaccine candidate being developed in China is expected to be available as soon as the end of this year, according to a report published in China. Moderna began a mid-stage trial of a vaccine that showed promising safety and early efficacy data this month. Singapore and China agreed to allow essential travel between the two countries starting in early June.Key Developments:Virus Tracker: Cases top 5.9 million; deaths over 365,000Brits emerge from lockdown to find affordable dining threatenedRace to the freezer: Europe’s flood glut has nowhere to goHow China tested 11 million people in just two weeksEvery worker has Covid at one U.S. farm on eve of harvestEuropeans not feeling very hopeful about their economy just yetSubscribe 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.S&P Sees Abu Dhabi, Bahrain Economies Shrinking (5:20 p.m. HK)Abu Dhabi’s economy will contract 7.5% this year, S&P Global Ratings said, citing lower oil production and the pandemic.Bahrain’s economy will shrink 5% this year because of low oil prices, although government stimulus measures should provide some support, S&P said. The ratings company expects Bahrain’s economy to rebound in 2021 as oil prices recover and regional activity increases.Merkel Says Stimulus Plan to Promote Innovation (5:19 p.m. HK)German Chancellor Angela Merkel said an economic stimulus program her ruling coalition is seeking to agree on in coming days should be focused on innovation and sustainable industries.“We will decide on a growth program in the coming week that should help the economy to get back on track and grow,” Merkel said Saturday in her weekly podcast. “The trick will be to do it in such as way as to give a boost both to innovation and sustainable industries, so that we also become strong in the sectors of the future.”Indonesia Gears Up for Post-Holiday Return (5:02 p.m. HK)Indonesia’s capital Jakarta is anticipating one million vehicles will enter the city as people return from Eid al-Fitr holidays. Traffic, including motorcycles, is projected to peak from Saturday to Monday, according to a Cabinet Secretariat statement. While the figure is lower compared to the 2.8 million vehicles recorded last year, the flow of so many travelers is raising concern as the nation’s coronavirus cases grow.Indonesia now has the highest coronavirus death toll in Southeast Asia, with 1,573 people succumbing to the disease as of Saturday. New cases have more than doubled in May, with the total reaching 25,773.Uzbekistan Extends Lockdown Restrictions (3:36 p.m. HK)The Uzbek government has decided to extend lockdown restrictions until June 15. Central Asia’s most populous nation has confirmed 3,513 cases of infection of the coronavirus, with 14 deaths and 2,728 recoveries.Singapore Reports 506 New Cases (3:30 p.m. HK)Singapore reported 506 new infections as of Saturday, according to a statement from its Health Ministry. A vast majority of the additional infections are of work permit-holders who live in foreign workers’ dormitories, according to the statement. The ministry is expected to provide additional details in the evening, it added.Chinese Vaccine Expected to Begin Mass Output This Year (3:25 p.m. HK)A front-running Covid-19 vaccine being developed in China is expected to be available as soon as the end of this year, according to a report published in the official Wechat account of the State-owned Assets Supervision and Administration Commission.The vaccine, jointly developed by the Beijing Institute of Biological Products and China National Biotec Group Co., has completed phase II testing and may be ready for the market at the end of this year or early next year, said the report.The production line for the vaccine will be fully disinfected and closed in preparation for output to start Saturday, and will have a manufacturing capacity of 100 million-120 million vaccines each year.Iran Lifts Restriction on Shopping Hours (2:26 p.m. HK)Iran has lifted a restriction on the operating hours of shopping malls in the latest step of reopening the economy. Meanwhile, all mosques in the country will be open to worshipers for daily prayers three times a day, President Hassan Rouhani said in a national coronavirus taskforce briefing broadcast on state TV.South Korea Has Outbreak at Distribution Center (1:46 p.m. HK)South Korea reported 39 new coronavirus cases in 24 hours as health officials seek to control a new outbreak at a distribution center for Softbank-backed Coupang Corp., an e-commerce company.A total of 108 infections are related to the center, the vice head of the Korea CDC said in a briefing. That tally includes 73 employees and 35 people who might have come into contact with the employees. A separate outbreak related to nightclubs in Itaewon, Seoul have increased to 269 infections as of Saturday, Kwon said.Most Australians Support State Border Closures (1:40 p.m. HK)The majority of Australians approve of states’ decisions to shut their borders amid the coronavirus crisis, according to a new poll.More than three in four Australians surveyed this week said they back the closures, including 40% who “strongly” support them, according to a release by The Australia Institute, a public policy group that commissioned the poll. One in five opposed the states’ measures.“The strong support for state border closures shows that while there is much public relief with some public health restrictions lifting, there is also still much community concern regarding the spread of Covid-19,” Ben Oquist, the institute’s executive director, said in the release.U.S. Supreme Court Rejects California Church (12:36 p.m. HK)A divided U.S. Supreme Court refused to exempt a San Diego church from crowd limits imposed by California to stop the spread of the coronavirus.Chief Justice John Roberts joined the court’s liberals in the 5-4 majority, writing that judges should be reluctant to second-guess state officials on questions of health and safety during a pandemic. The order came hours after the court refused to intervene on behalf of two Chicago-area churches that said Illinois coronavirus restrictions were so strict they violated the Constitution.Australia to Urge Eliminating Payroll Tax (11:20 a.m. HK)Australia’s government will call on states to eliminate payroll taxes as part of the nation’s efforts to jump-start the economy and create jobs, Treasurer Josh Frydenberg said in an interview with the Daily Telegraph.“I’d love the states to get rid of the payroll tax,” he said.The government’s coronavirus recovery plans will involve changes to taxes on income, and for small and medium businesses, Frydenberg said in the interview. The proposals should be finalized ahead of the government’s annual budget release in October, he said, according to the report.Sotheby’s Realty Gets Trump Backing to Fight Michigan Lockdown (10:40 a.m. HK)A group of small business owners in Michigan fighting stay-at-home orders by the state’s governor, saying they threaten their livelihoods, got a boost from the Trump administration.“As the president and many states have recognized, the onerous restrictions on civil liberty that Americans have tolerated to slow the spread of Covid-19 cannot continue forever, and the Constitution will not allow them to do so,” the Justice Department said in a court filing in support of a lawsuit challenging executive orders by Governor Gretchen Whitmer.The lawsuit the Trump administration is backing was filed in late April by a franchise of Sotheby’s International Realty, along with a lawn and property maintenance company, an automotive glass exporter, an engine oil and auto parts distributor, a jewelry store, a dental office and an association of car washes.Singapore, China to Allow Essential Travel Starting (9:42 a.m. HK)Singapore and China have agreed to allow essential travel for business and official purposes between the two countries in early June, according to a joint emailed statement.The Fast Lane arrangement will be first applied between Singapore and six Chinese provinces or municipalities directly under the central government, and will gradually expand to include additional areas. Covid-19 prevention and control measures will remain in place.The agreement comes as countries cautiously seek to begin so-called “travel bubbles” after the pandemic shut down borders. China, where the coronavirus first emerged, appears to have brought its cases under control, while Singapore is moving toward opening its economy after wrestling to contain an outbreak among thousands of foreign workers.China Cargo Ship Source of Two New Reported Infections (9:35 a.m. HK)Two crew members of a Chinese-registered cargo ship, Zhong Chang Rong Sheng, tested positive for Covid-19 in China’s Shandong Province after they arrived from India via Singapore, state television CCTV reported on its official Weibo account.The two Chinese nationals, and another crew member who hasn’t tested positive, have been hospitalized, while the remaining 19 people on board are still under quarantine on the vessel. It docked at Lanshan Port of Rizhao in Shandong province on May 27. The two infections are among four new coronavirus cases, all imported, reported by China.Chile Gets Flexible Credit Line From IMF (8:35 a.m. HK)The International Monetary Fund approved a $23.9 billion credit line for Chile as one of South America’s wealthiest nations grapples with a recession amid the virus that the central bank forecasts may be the worst since the 1980s.The two-year flexible credit line is a precautionary measure that should boost market confidence and provide insurance against downside risks, the fund said in an emailed statement late Friday. Managing Director Kristalina Georgievasaid that although the nation has a good track record, its trade openness exposes it to external risks.United Airlines Will Add Back International Flights in July (8:30 a.m. HK)United Airlines Holdings Inc. will add back some international flying in July, saying demand has “risen modestly” in some markets after the Covid-19 pandemic all but wiped out travel.Flights will resume or increase on 40 international routes in July, United said in a statement Friday. The Chicago-based airline will serve only 27 foreign routes in June. United has said its overall schedule will be down about 75% from a year earlier in July, compared with a 90% reduction currently.The plan to increase flying reflects a modest rebound in demand for all U.S. airlines as travel restrictions ease and economic activity picks up.Germany, EC Settle Lufthansa Aid (7:15 a.m. HK)Germany settled a dispute with the European Commission over a 9 billion-euro ($9.9 billion) bailout of Deutsche Lufthansa AG, clearing the way for the carrier to accept a rescue package to help it weather a collapse in travel demand triggered by the pandemic.The deal requires Lufthansa to reduce the number of aircraft kept at Frankfurt and Munich airports. Lufthansa said it would surrender up to 24 takeoff and landing slots, making room for new competitors at each hub.Germany on Monday offered Lufthansa a package of loans and equity investment to keep the carrier flying through the coronavirus. But after the EU demanded the carrier give up slots in Munich and Frankfurt, the airline’s supervisory board unexpectedly held off on accepting this lifeline -- throwing the rescue plan into turmoil after weeks of talks.Brazil Deaths Go Past Spain (6:30 a.m. HK)Brazil eclipsed Spain and now ranks fifth worldwide in coronavirus deaths with no sign the pandemic is slowing in Latin America’s largest economy. The country reported 1,124 new deaths Friday, pushing the total to 27,878, past Spain with 27,121. Brazil registered 465,166 cases, trailing only the U.S.Infections are reported in 70% of Brazilian cities, the Health Ministry said on Friday. Earlier this week, the ministry said the curve of cases was still growing, and a report by UBS published Wednesday said that six of Brazil’s 27 states are peaking, while total deaths are increasing in 21 states.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 Opinion) -- Too bad I didn’t keep our plane tickets from 2012 as souvenirs. They showed us departing from Los Angeles (LAX) and arriving at Berlin Brandenburg Airport (BER), which was just about to open. But the launch, already delayed the previous year, was again called off at the last minute. So we landed instead at the charming but small Tegel airport (TXL) that dates back to the early Cold War.Over the years, other opening dates came and passed for BER, owing to construction flaws, from failing fire-safety vents to elevators too short for their shafts. Now, though, in a triumph of hope over experience, Berliners are daring to get excited once again about what’s been called their “phantom airport.” Tegel, largely cobwebbed since the Covid-19 outbreak, will start shutting down in June, and BER is actually ready to open in October. It’s ironic, of course, that Berlin is finally bringing its new airport online just as a pandemic is keeping most people from checking in.And yet BER is still worth celebrating, if only as a symbol. That’s because the tale of Germany’s runways and terminals also reflects the country’s dramatic history. Each former and current airport has a chapter in the story of a nation that used to be aggressive, tragic and divided, before becoming successful, rich and reunified. In a sense, the opening of BER confers closure on a traumatic past and marks the beginning of something resembling normality.There was a time, in the roaring 1920s, when Berlin’s oldest airport, located in Tempelhof near the city center, was actually Europe’s busiest. Then Adolf Hitler took over and rebuilt Tempelhof in the 1930s to fit his Nazi visions. A few years later, the city, country and continent lay in ruins, and the Americans took Tempelhof as theirs.Soon Tempelhof got itself a new and more heroic image. It was where American, British and French “raisin bombers” landed — every 30 seconds at one point — during the Berlin blockade of 1948-1949, to feed a population that was entirely surrounded by the Soviets.Even after the airlift prevailed, however, it was clear that German aviation during the Cold War would take new routes. Until 1990, only the airlines of the three Western allies — such as Pan Am, British Airways and Air France — were allowed to fly to West Berlin. Although the Americans kept some of the glamor of Tempelhof and the French expanded Tegel, Berlin had changed from a capital to a sideshow.So the action moved to West Germany. The region of Hesse grasped that, being in the middle of the country’s new geography, it could turn Frankfurt, often called Germany’s “secret capital,” into a continental traffic node. This had a certain economic and historical resonance. In the Middle Ages, emperors had been crowned here; later, it was where Rothschilds built financial dynasties. By the 1960s Frankfurt was becoming “Bankfurt,” a sort of German Wall Street. It was a promising place for an airport, and Lufthansa, the German flag carrier, gradually made FRA its hub.As West Germany’s postwar economy boomed, other metropolises and their airports also thrived. Stuttgart (STR) benefited from serving the Swabian heartland of Germany’s vaunted Mittelstand of family-owned firms. The main airport in the populous Rhineland is Duesseldorf (DUS), which by the late 1970s took second place behind FRA for a while.But the real success story was Munich. In the immediate postwar era, Bavaria was an economic backwater. This changed, as successive state leaders, most notably Franz Josef Strauss between 1978 and 1988, hewed to traditional culture while also wooing cutting-edge companies and entrepreneurs, a strategy later dubbed “laptops and lederhosen.”A centerpiece of this effort was a new airport, named after Strauss. The old one, Riem, was cramped and gloomy. The new one, MUC, which opened in 1992, was light-swept and transparent but still easily navigable and cosy — a perfect architectural expression of what the newly reunified Germany strove to be. MUC became a second hub for Lufthansa.At the same time, the decision was made to move the federal government from Bonn back to Berlin. So, during the 1990s, planning began for an airport appropriate to Berlin’s new role, while Tegel and Schoenefeld (SXF), formerly used by the East Germans, kept handling the booming traffic. Tempelhof, used mainly by smaller planes in its final years, was eventually closed in 2008. Today its runways are a Mecca for kite-landboarders.But even as these old names fade into history and the long-awaited BER takes over, Berlin won’t ever recapture its prewar dominance. Like the U.S. but unlike France, say, Germany is decentralized in its politics, economy and transportation infrastructure. The country has many competing hubs.To pessimists, BER symbolizes Germany’s bad developments. Its highly publicized bureaucratic and engineering fiascoes have dented the country’s former reputation — not always entirely flattering — of being relentlessly meticulous and punctual. The subtext is that Germany, whether it’s building airports or algorithms, is increasingly leaving economic dynamism to others, especially China.To optimists, this too is part of Germany’s long historical arc to “normality.” Germans today are more relaxed about their national identity and place in the world than they’ve ever been. That explains why they’ve also been nonchalant about BER’s travails. The truth is, many Germans have secretly been savoring the airport headlines as a font of gossip. Many an awkward dinner party has been saved by boozy debates about whether humans would set foot on Mars before disembarking at BER, or whether it would be more cost-effective to rebuild the capital near a working airport.Even the coincidence that BER is now opening in 2020, the annus horribilis of Covid-19, may turn out to be unexpectedly appropriate. Experts have been worrying all along that the airport would already be too small when opened. The pandemic has taken care of that. As Lufthansa enters a government rescue program and people shy away from flying, Berlin’s airport could turn out to have just the right proportions. That, too, is worth raising a glass to.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andreas Kluth is a columnist for Bloomberg Opinion. He was previously editor in chief of Handelsblatt Global and a writer for the Economist. He's the author of "Hannibal and Me." For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Lufthansa's management board accepted a more favourable set of demands made by the European Commission in exchange for approval of a 9 billion euro (8.13 billion pounds) government bailout, the carrier said on Saturday, paving the way for its rescue. The agreement comes after Lufthansa's supervisory board on Wednesday rejected an initial deal with Brussels including conditions that were significantly more painful. Lufthansa and the rest of the airline sector have been hard hit by what is expected to be a protracted travel slump due to the coronavirus pandemic.
Scores of German business executives were due to return to China on Friday evening, beneficiaries of an accelerated entry procedure offered by Beijing as both countries seek to reignite their economies after months of lockdown. Under a deal brokered by the German Chamber of Commerce in China, staff from hundreds of German companies with units there can return without undergoing two weeks' quarantine if they can show a certified negative coronavirus test. Among the executives waiting to board the chartered Lufthansa flight to Tianjin was Karin Warowski, a controller at carmaker Volkswagen, who was eager to rejoin her husband after months of separation.
Does anyone remember Alfred Herbert? Back in the 1970s, this company was Britain’s largest machine tool maker and regarded by the then Labour government as strategically important. Thus, when the company ran into a financial crisis, the government intervened and pushed it into the arms of the National Enterprise Board, the agency that had been created to rescue temporarily sick companies of this sort.
EU antitrust chief Margrethe Vestager denied on Friday that she was putting hurdles in the way of Lufthansa's $10 billion government rescue, saying companies getting big capital injections from the state have to offset their competitive advantage. Vestager wants Lufthansa to permanently give up some take-off and landing slots at Frankfurt and Munich airports, where it commands a two-thirds market share, in return for giving the green light to the German government taking a 20% stake in the airline. Lufthansa's board, however, has rejected her demands.
The Berlin government is likely to reach a deal with Brussels on a $10 billion government bailout of stricken airline Lufthansa <LHAG.DE>, senior government official Thomas Jarzombek said on Friday, but stressed the German airline needed fair treatment. The deal was thrown into doubt on Wednesday after Lufthansa's supervisory board refused to accept the conditions attached by Brussels to the aid. The board did not agree with EU requirements that Lufthansa permanently give up take-off and landing slots at Frankfurt and Munich airports, where it commands a two-thirds market share.
Margrethe Vestager, the EU competition chief, has rejected accusations that Brussels is creating “extra hurdles” for the €9bn bailout of Lufthansa, after the German group’s supervisory board balked at requests to relinquish lucrative slots at its hub airports in Frankfurt and Munich. Speaking to journalists on Friday, Ms Vestager said rescue packages in which states injected large amounts of capital would be seen by investors as “a strengthening of the company”, and thus make it easier for saved businesses to raise money. On Monday, Germany agreed to support its national carrier with a capital injection of €5.7bn, as well as €3bn in government-backed loans, and €300m-worth of new Lufthansa shares, which would give Berlin a 20 per cent stake in the airline.
(Bloomberg) -- The German government bristled at the European Commission’s antitrust demands on its 9 billion-euro ($9.9 billion) bailout of Deutsche Lufthansa AG, in a sign of rising tensions over the stalled aid package.The insistence by officials in Brussels that Lufthansa ditch some of its takeoff-and-landing slots in Frankfurt and Munich is unfair, German Transport Minister Andreas Scheuer told Germany’s Bild newspaper late Wednesday.“The European Commission doesn’t do this with other airlines,” Scheuer said in comments to the newspaper, citing Italy’s plan to nationalize Alitalia SpA as an example.Concerns that European Union requirements would hit Lufthansa’s business led the airline’s supervisory board to unexpectedly hold off on accepting the German lifeline on Wednesday, throwing the rescue plan into turmoil after weeks of talks. The labor-heavy board sees a threat that jobs would be lost and the market would shift toward discount airlines that pay less.The stalemate has taken Lufthansa’s crisis to a new level of urgency, with Germany’s government trying to square clear-cut EU rules with governance dynamics at the airline. In the balance is the arrival of much-needed funds. Chief Executive Officer Carsten Spohr warned employees Wednesday that the airline would struggle to pay wages in June if it can’t get hold of the bailout cash, according to a person familiar with the matter.Aid TermsThe German aid package unveiled on Monday involves the state 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, and a three-year loan of 3 billion euros.The prospect of Germany becoming Lufthansa’s biggest investor has raised concerns in Brussels that the airline, backed by such a powerful shareholder, would increase its dominance over the aviation market.The EU defended tougher conditions for the recapitalization than for a loan. The capital infusion “does not increase the debt exposure of the company and ensures that the company is supported by a strong shareholder,” the EU said on Wednesday.German government officials concede in private that Lufthansa will need to give up a sizable amount of capacity in Germany to secure the European Commission’s blessing. Lufthansa could also be asked to cut back 20 planes in Germany, a person familiar with the matter said Wednesday.Lufthansa, along with its subsidiaries, dominates slot allocation at the two Frankfurt and Munich hubs. Germany’s DLR aerospace center has estimated the group has a two-thirds share of the nation’s commercial aviation market.Shareholder VoteThe airline opted against immediately calling a shareholder vote and said the proposal will be reviewed, citing a need to analyze the economic hit, the repayment of the aid and possible alternative scenarios. Lufthansa’s employee representatives, holders of half the votes on the supervisory board, are also fiercely opposed to the European Union demands on slot disposals.“The 140,000 jobs at Lufthansa cannot be endangered through nonsensical and competition-distorting demands,” Markus Wahl, president of the VCI pilots’ union, said in an emailed statement.Read more on the airline crisis:EasyJet Shrinks After Virus Brings Abrupt End to Years of GrowthSAS Warns Shareholders It Needs More Money as 5,000 Jobs CutRyanair Maps Growth With 737 Max Jets While Rivals ShrinkStill, the bailout remains “as the only viable alternative for maintaining solvency,” according to the board. But the holdup underscores the political tensions underpinning the effort to stabilize Europe’s largest airline in the midst of a historic collapse in travel.The delay comes with Lufthansa severely weakened by the coronavirus crisis. The carrier has just weeks of liquidity remaining before it runs out of cash, according to people familiar with the matter. The proposed bailout requires shareholder and EU approval before the funds can be distributed, a process that could take several weeks even without the new delay.The supervisory board is expected to meet again to discuss the package once it has more information on the slots matter. The airline can call a meeting at short notice, meaning it could still approve the deal this week.‘Ungrateful Lufthansa’Germany is separately seeking EU assurances that any deal put to shareholders is compliant with state-aid rules, the people said. It wants a so-called comfort letter from regulators to offer legal clarity on financial aspects before the EU approves the deal, one person said. That would not cover the dispute over slots.Merkel said Wednesday that talks regarding Lufthansa are ongoing. Spokespeople at the airline and in Germany’s Economy Ministry declined to comment.Ryanair Holdings Plc, Europe’s largest low-cost carrier, criticized Germany’s rescue effort as an “illegal state aid scheme, which the ungrateful Lufthansa has clearly rejected.”A decision by the German airline to hand over slots in Frankfurt and Munich would boost competition, Ryanair said in a statement.“If the German government is serious about restarting air travel to and from Germany, then this state aid should be replaced with a different scheme, which would reduce air travel taxes for all airlines operating in Germany for the next 24 months,” Dublin-based Ryanair said.(Adds chart to previous version)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.
Deutsche Lufthansa AG (OTC: DLAKY) board of directors postponed a decision to accept a $9.8 billion economic relief package from the German government after European Union competition authorities said the airline would have to relinquish valuable slots at its hubs in Frankfurt and Munich.Giving up takeoff and landing slots would harm the company's hub-and-spoke business model and finances, the board said in a statement on Wednesday. Nonetheless, it continues to regard Germany's "stabilization measures as the only viable alternative for maintaining solvency."The EU demands led the board to also postpone a general meeting to seek shareholder approval for the bailout offer.Slots are essentially flight quotas that authorities assign to airlines at busy airports and can give to competitors if most of the rights aren't utilized in a given year.Lufthansa has been seeking aid in European countries where it has subsidiaries. Switzerland last month agreed to provide emergency support to one of those companies, Swiss International Air Lines.Under Prime Minister Angela Merkel's plan, the government would take a 20% stake in Lufthansa in return for an injection of capital and loans.Irish low-cost carrier Ryanair Holdings plc (NASDAQ: RYAAY) is pressing the EU to break Lufthansa's fortress hold on Frankfurt and Munich, where it controls three-quarters of the slots, and in Vienna and Zurich, where American Airlines Group Inc. (NASDAQ: AAL) and SWISS, respectively, dominate, according to the Financial Times.German politicians also opposed the idea of dismantling the existing arrangement to benefit a low-cost carrier, the newspaper said.Photo: LufthansaSee more from Benzinga * Mitsubishi Fuso Ending Truck Sales In US And Canada * A Tale Of Two Cities And How They're Welcoming Trucking Facilities * Getting Crews On And Off Ships And Airplanes(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
European low-cost airlines are pressuring airports to slash charges in return for resuming flights, as the COVID-19 shutdown intensifies their race with traditional carriers to lower costs and win post-pandemic business. In letters shared with Reuters, Wizz Air, Ryanair and easyJet have demanded long-lasting fee discounts or waivers from airports, signalling that the lowest offers will win more returning traffic. Wizz Air, in a "request for proposals" from airports last month, indicated it was ready to shake up its business, flagging "significant shifts in network strategy resulting in capacity reallocation between airports".
May.29 -- Germany is undergoing a quiet revolution. Angela Merkel is seizing her chance to revolutionize Europe’s largest economy. The coronavirus pandemic has revived a radical plan to transform Germany into a state capitalist with echoes of France and China. With infection rates surging and stringent restrictions on people and businesses, there is little time for debate and no serious opposition to a plan that one of Merkel’s chief advisors had drawn up a year beforehand. Bloomberg’s Birgit Jennen reports on “Bloomberg Markets: European Open.”
The likes of Delta (DAL) and United Airlines (UAL) are looking at ways to promote cleanliness in a bid to encourage passengers to resume flying.
Lufthansa's $10 billion government bailout was thrown into doubt on Wednesday after the German airline's supervisory board refused to accept the conditions attached by Brussels. The board, which had been expected to sign off on the aid, instead refused EU requirements that Lufthansa permanently give up take-off and landing slots at Frankfurt and Munich airports, where it commands a two-thirds market share. The bailout plan nevertheless remains "the only viable alternative" to insolvency, Lufthansa said, and negotiations will continue over EU demands that would "lead to a weakening" of its airport hubs as well as its ability to repay loans.
German Economy Minister Peter Altmaier said on Wednesday he expected the European Commission to approve a 9-billion euro bailout of flagship carrier Lufthansa, adding that it was also in Europe's interests to avoid a sell-off of such companies. "We're in negotiations in Brussels with the European Commission about the details of an approval," Altmaier said. "And I want to add, with all emphasis and with all respect: It's not only in Germany's interests, but also in the European Union's interests to avoid a sell-off of strategic interests in the industrial sector as a result of this pandemic."
(Bloomberg) -- One of the few sectors left behind in the sharp April rebound has finally taken off. European airlines have rallied hard in the past few days, spurred by bailouts and economies reopening. Full recovery may still be a long way down the line, but investors don’t want to be left behind.The Bloomberg EMEA Airlines Index has finally broken out of a tight range that held for more than two months. The index is up 32% since May 15, but such was the extent of the sector’s drop that it’s still down 45% for the year.There’s been a string of positive news recently for the sector. Economies are slowly reopening across Europe, and tourists on the continent are likely to be able to travel this summer, even though Germany’s decision on travel warning was postponed to June 3. At a corporate level, there has been government support or bailouts for legacy airlines such as Air France-KLM and Deutsche Lufthansa AG.Bailouts and state-guaranteed loans come at a price though. Airlines are likely to end up with high levels of debt and potentially less management flexibility in cases where states become shareholders. In Lufthansa’s case, note that the EU already made some demands on airport slots, while Ryanair Holdings Plc said it will appeal the aid. As for Air France-KLM, the carrier already started talks with unions to cut staff and capacity.According to airlines association IATA, 55% of government aid made available to airlines due to Covid-19 crisis will create debt. Overall, airlines’ debt is expected to surge from $430 billion at end-2019 to $550 billion at end-2020, a nearly 28% increase.This wouldn’t be a major problem if demand was expected to pick up fast, but that’s hardly the case. For example, British Airways already warned it doesn’t see demand reaching pre-crisis levels before 2023.Other changes prompted by the pandemic will also weigh on the sector. The U.K.’s decision to impose a fortnight’s quarantine on travelers entering or coming back to the country is a blow to the industry, given Britain is by far the biggest European market by ticket revenue, according to IATA, and also the least “state-sponsored,” as shown in the chart below.Profitability will likely continue to suffer, especially given that company travel isn’t expected to recover rapidly either. Just a 1% impact on corporate volumes would erode airline profits by 10%, Citigroup Inc. analysts say. They also generate 40% of revenue, with only 15% of passengers. Looking at the chart below, the rout in earnings forecast is unprecedented, and some recovery on that front may be needed to justify further gains.Looking at single stocks, Ryanair and Wizz Air Holdings Plc are the only two “investable airlines,” Citi analysts including Mark Manduca said on Monday. According to them, both IAG SA and EasyJet Plc are likely to raise more capital in the coming months, while there is very little equity left in Lufthansa, no matter how much money the German government provides the airline.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.
Lufthansa’s supervisory board has refused to approve a €9bn bailout package proposed by the German government, after the European Commission sought to force the airline to give up coveted slots at Frankfurt and Munich airports. Following a meeting on Wednesday, the stricken group said it would put off calling the extraordinary general meeting required to get shareholders’ approval for the deal, even as it burns through at least €1m an hour with the vast majority of its planes grounded. The EU competition authority’s demands, the supervisory board said, “would lead to a weakening of the hub function at Lufthansa’s home airports” and the resulting economic impact had to be “analysed intensively”.
(Bloomberg) -- New York City has hired 1,700 contact tracers who will be working by June 1, and Governor Andrew Cuomo said he would now focus on reopening the most populous U.S. city, the only region still under state-ordered lockdown.Wuhan, the hub of China’s coronavirus outbreak, said it tested almost 7 million people in 12 days, after several infections prompted worries about a second wave.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.Key Developments:Virus Tracker: Cases top 5.5 million; deaths over 348,000Federal 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.Biden Waiting on Delaware to Resume Campaign Events (6:45 a.m. HK)Joe Biden said Tuesday he hopes to resume in-person events after spending more than two months campaigning virtually from his Delaware home. Biden told CNN he’s following his state’s stay-at-home orders, but he hopes to resume a public schedule once that is lifted.Biden and his wife, wearing masks, made their first public appearance on Monday, when they laid a wreath at a veterans memorial in New Castle, Delaware.Disney, SeaWorld Plan Florida Reopenings (5:20 p.m. NY)Walt Disney Co. and SeaWorld Entertainment Inc. will be the next two theme-park operators to present their reopening plans to the Florida task force charged with bringing the region’s tourist economy back following a more than two-month closing.Comcast Corp.’s Universal Studios parks have already requested and won the right to reopen to the general public on June 5. Legoland, a unit of Merlin Entertainments Ltd., said it will open June 1. Disney and Universal have already opened the malls outside their resorts, much as Disney did in Shanghai before its theme park there reopened.Chicago Trading Floor to Open June 8 (5:10 p.m. NY)Cboe Global Markets Inc. plans to open its Chicago options-trading floor on June 8. Activity on the exchange has been electronic-only since March 16.Half of the floor’s participants are expected to return to the reconfigured space next month, Cboe said. “Rigorous precautionary measures” to limit exposure to the coronavirus include a different layout to allow for social distancing and capacity limits, the wearing of masks and medical screening at entrances.Merck’s Gerberding Warns on Vaccine Timing (4:55 p.m. NY)Hopes to quickly launch a safe and effective vaccine may be unrealistic, Julie Gerberding, chief patient officer at Merck & Co., said the day Merck announced it’s working on two vaccines and an anti-viral medication in pill form. Her caution stems from the company’s experience fighting Ebola as it took until last year for that vaccine to win regulatory approval in the U.S.“I hope the people who are predicting a faster timeline than we have ever imagined are right, but we are talking about vaccinating the world,” she said during an online discussion hosted by the Federal Reserve Bank of Minneapolis. “Many of the lessons learned are partly why we are not over-promising on delivery times, because we have a basis in reality for understanding the complexities of trying to do this in an international manner.”It’s impossible to say how quickly a vaccine may be available, even taking into account the vast financial resources and scientific power that governments and industry are putting toward the effort, she said. While a vaccine can be crafted faster than one ever has been previously, extra effort needs to be made to ensure they are safe. “We have to be absolutely sure before we vaccinate the population that we are protecting people from the virus and more importantly not harming them through an unproven vaccine,” she said.California Opens Salons, Barbershops (4:35 p.m. NY)Barbershops and hair salons in California counties already restarting their economies can open as early as Tuesday, Governor Gavin Newsom said, adding that his family had just subjected him to a home haircut. Forty-seven of the state’s 58 counties meet criteria for such reopenings, though major population centers including Los Angeles and San Francisco still have tighter restrictions.The most-populous U.S. state relaxed rules for church gatherings and allowed in-store shopping at retailers on Monday. Guidelines for restarting the entertainment industry had been expected Monday but may not come until later in the week or the weekend, Newsom said.“The industry and labor asked for a little bit more time as they work through some issues,” Newsom said at his daily briefing. “We thought that was a very healthy thing, and I was very encouraged by that.”U.S. Cases Rise 1.1%, Slowest Since March (4 p.m. NY)Coronavirus cases in the U.S. increased 1.1% as compared to the same time yesterday, to 1.67 million, the slowest daily increase since March, according to data collected by Johns Hopkins University and Bloomberg News. That’s lower than Monday’s 1.3% rate and below the average of 1.4% in the past seven days. Deaths rose 0.7% to 98,584.New York saw its fewest new hospitalizations and fatalities since the outbreak began, according to Cuomo. About 200 people were admitted to hospitals, down from a peak of more than 3,400. There were 73 deaths, down from a high last month of nearly 800.Florida reported 52,255 cases, up slightly less than 1% from a day earlier, compared with an average increase of 1.6% in the previous seven days, according to the state’s health department. Deaths reached 2,259, an increase of 0.3%.New Jersey had 703 new cases and 54 deaths over 24 hours, according to Governor Phil Murphy. Hospitalizations, at 2,723, were down by about 1,500 over the past two weeks.U.S. Aims to Boost Tests Sharply (3:20 p.m. NY)The Trump administration has released coronavirus testing targets for May, an aggressive expansion that would have some states doubling, quadrupling and even, in the case of Puerto Rico, completing 5.6 times the number they had done through late April.The White House announced on May 11 that states had set the goals in partnership with the Trump administration, but didn’t release specifics. The breakdown of targets by state was released Sunday as part of a testing plan outlined by the U.S. Department of Health and Human Services in a report to Congress.The HHS plan calls for about 12.9 million tests this month. States are nearly two-thirds of the way to meeting that goal, with roughly 8.3 million administered as of Monday, according to the Covid Tracking Project, a volunteer initiative to track virus data.Chicago to Hire Contact Tracers (3 p.m. NY)Chicago is seeking to recruit 600 people for a Covid-19 initiative that can trace 4,500 new contacts per day, according to Mayor Lori Lightfoot.The city has allocated $56 million in funding to hire and train a workforce of contact tracers, supervisors and referral coordinators, Lightfoot said in a statement Tuesday.“Thanks to our close community partnerships, our work to expand our contact tracing workforce will also empower these same individuals to apply their new skills towards long-term career opportunities,” Lightfoot said.Cuomo Turns Focus to Reopening NYC (12:51 p.m. NY)Governor Andrew Cuomo said his administration will now focus on reopening its economic engine, New York City, the only state region still on lockdown.The Mid-Hudson region, which includes Westchester County, will restart beginning Tuesday, and Long Island will take steps Wednesday. New York City was hardest hit by the novel coronavirus, and its recovery has been the toughest, Cuomo said Tuesday at a press briefing.The economy will need government help to bounce back, Cuomo said, so the state plans to fast-track its plan to rebuild Penn Station. It will also accelerate LaGuardia Airport renovations. The state will need federal approval for some projects, and Cuomo said that is one of the issues he will discuss when he meets Wednesday with President Donald Trump in Washington.New York reported its fewest new hospitalizations and fatalities since the outbreak began. About 200 people were admitted for Covid-19, down from a peak of more than 3,400. There were 73 deaths reported on May 25, down from a high of nearly 800.BofA Staff to Return in Phases (12:15 p.m. NY)Bank of America Corp. is making plans for employees to return to their offices in phases.The moves will vary by role, department and location, and workers will be notified at least 30 days before they’re scheduled to return, according to a memo seen by Bloomberg. A bank spokeswoman confirmed the contents of the memo.“We will move slowly and carefully, driven by business need, with safety as our highest priority,” the bank said in the memo.Italy Deaths Below 100 for Third Day (12:03 p.m. NY)Italy reported 397 new coronavirus cases on Tuesday as daily fatalities stayed below 100 for a third consecutive day. Civil protection authorities had reported 300 cases a day earlier, the fewest since late February. Daily deaths fell to 78 from 92 on Monday; a total of 32,955 fatalities have been reported since the start of the pandemicN.J. Graduations to Start July 6 (11:54 a.m. NY)New Jersey schools can hold outdoor graduation ceremonies starting July 6, with participants required to follow social-distancing rules, Governor Phil Murphy announced.He also said professional sports teams may “return to training and even competition -- if their leagues choose to move in that direction.” The National Football League’s New York Jets and New York Giants both practice and play in New Jersey.New Jersey reported 703 new cases and 54 additional deaths over 24 hours.The holiday weekend probably kept the reports artificially low, he said, but the trend in recent days has been “way down from our peak.”Florida’s New Cases Slow (11:43 a.m. NY)Florida’s total Covid-19 cases rose less than 1% on Tuesday from a day earlier, compared with an average of 1.6% in the previous seven days. Deaths among Florida residents reached 2,259, an increase of 0.3%.In separate parts of its website, Florida updated the number of total cases Tuesday to 52,255 and 52,170, and it wasn’t clear which would stand. The Florida Department of Health didn’t immediately respond to an email, text message and phone call. But in both cases, the increase was less than 1% and marked a deceleration.NYC Hires 1,700 Contact Tracers (10:44 a.m. NY)New York City has hired more than 1,700 so-called contact tracers, who will be trained and in action by June 1, Mayor Bill de Blasio said.The city had set out to hire 1,000 but surpassed that goal, de Blasio said during a press briefing Tuesday. Tracers are key to stemming the spread of the coronavirus by identifying who people infected have come into contact with.“This is a huge new piece of the puzzle,” de Blasio said. “This is when we go on the offensive.”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.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.
Low-cost carrier Ryanair challenged Germany's 9 billion euro rescue package for Lufthansa on Tuesday, saying it distorted competition, while the German carrier moves towards finalising the deal next month. The government-backed aid will allow Lufthansa to "engage in below-cost selling" and make it harder for Ryanair, its Laudamotion subsidiary and rival low-cost carrier easyJet to compete, Ryanair Chief Executive Michael O'Leary said in a statement on Tuesday. "Ryanair will appeal against this latest example of illegal state aid to Lufthansa, which will massively distort competition," O'Leary said in the statement.
Austria's government and Lufthansa-owned carrier Austrian Airlines <LHAG.DE> on Tuesday reached agreement on loans for the airline and to keep Vienna airport as a long-haul hub, a major step forward in the rescue negotiations, daily Kurier said. Austria's government agency in charge of administering the COVID-19 rescue fund, COFAG, and a banking consortium led by Erste Group <ERST.VI> agreed on loans of 300 million euros ($330 million) over a period of six years, the newspaper said. Austrian Airlines (AUA) declined to comment.
(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.