Lufthansa, German government agree on rescue package: source

Via Reuters Finance

FILE PHOTO: Aircraft of the German carrier Lufthansa are parked on the tarmac, as the spread of the coronavirus disease (COVID-19) continues, at the airport in Frankfurt, Germany March 24, 2020. REUTERS/Ralph Orlowski/File Photo

BERLIN (Reuters) – The German government and the management of flagship carrier Lufthansa (LHAG.DE), which has been hit hard by the coronavirus pandemic, have reached an agreement on state aid worth billions of euros, a source close to the matter said.

The agreement is still pending approval by the German coronavirus rescue fund’s steering committee, which is expected to meet on Monday, as well as Lufthansa’s boards and the EU commission.

The German government declined to comment. A Lufthansa spokesperson declined to comment.

The carrier said last week that it was in advanced talks on a deal that would involve the government taking two seats on its supervisory board, but it would only exercise its full voting rights in exceptional circumstances, such as to protect the firm against a takeover.

Lufthansa has been in talks with Berlin for weeks over aid to help it cope with what is expected to be a protracted travel slump, but has been wrangling over how much control to yield in return for support.

Rivals such as Franco-Dutch group Air France-KLM (AIRF.PA) and U.S. carriers American Airlines (AAL.O), United Airlines (UAL.O) and Delta Air Lines (DAL.N) have also sought state aid.

Lufthansa has said it expected conditions of the deal to include the waiver of future dividend payments and limits on management pay. The plan includes a 3 billion euro ($3.27 billion) loan from the state-backed bank KfW, Germany taking a 20% stake in Lufthansa and a convertible bond, which could be exchanged for a further 5% stake.

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German news agency dpa earlier reported that a deal has been agreed.

Reporting by Christian Kraemer and Ilona Wissenbach; Writing by Arno Schuetze; Editing by Michelle Martin and Maria Sheahan