FRANKFURT (Reuters) – Lufthansa LHAG.E will seek to avoid a grounding and insolvency, Chief Executive Carsten Spohr said on Sunday, before a showdown between the airline’s biggest shareholder and the German government over the terms of a 9-billion-euro bailout.
FILE PHOTO: A Lufthansa jet is seen behind a barbed-wire fence at the airport as the spread of coronavirus disease (COVID-19) continues in Frankfurt, Germany, June 2, 2020. REUTERS/Kai Pfaffenbach/File Photo
Lufthansa has been hard hit by what is expected to be a protracted travel slump because of the COVID-19 pandemic, forcing it to seek a bailout.
Billionaire shareholder Heinz Hermann Thiele will meet the economics minister on Monday to discuss his objections to the state-backed bailout, a source close to the matter told Reuters.
As an alternative to the government taking a direct stake in Lufthansa, Thiele has proposed an indirect participation through state-owned German development bank KfW [KFW.UL].
In a letter to employees, Spohr said the airline was in intense talks with the government and large shareholders which had “the clear goal of finding a satisfactory solution for our company and all participants before Thursday,” when an extraordinary shareholder meeting will be held.
Expressing his desire to avoid a grounding or insolvency, he said: “I am sure this is an objective which unites all parties.”
Lufthansa warned last week that a failure to secure shareholder approval for the bailout could force it to apply for protection from creditors under German insolvency law.
The bailout requires the support of more than two thirds of shareholders. Thiele, who has 15.5% of Lufthansa’s shares, objects to the German state taking a 20% stake and seats on its supervisory board.
Spohr said shareholders representing 38% of the company’s capital had registered for the shareholder vote, handing Thiele an effective veto if he does not endorse the proposed deal.
Lufthansa will pay June salaries on Monday, Spohr said in the letter.
Lufthansa and Germany’s finance ministry declined to comment on the meeting. Thiele could not be reached for comment.
($1 = 0.8949 euros)
Reporting by Ilona Wissenbach in Frankfurt Holger Hansen and Rene Wagner in Berlin; Additional reporting by Joern Poltz; Writing by Edward Taylor; Editing by David Clarke and Timothy Heritage