Saturday, 23 October, 2021
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Lufthansa pays $1.7bn to buy part of German govt’s silent stake

BERLIN: Deutsche Lufthansa paid off a chunk of the German government’s remaining bailout package, eliminating part of its so-called silent participation support with €1.5 billion ($1.73bn) of the money it raised in a rights offering last week.

The €2.16bn equity raise is now complete and new shares issued, Lufthansa said on Monday in a statement. The company plans to repay the remaining €1bn of silent participation to Germany’s Economic Stabilisation Fund by the end of the year, report agencies.

Chief executive Carsten Spohr is racing to free Europe’s biggest airline from government strings before Chancellor Angela Merkel leaves office. With her Christian Democrats set to lose power, Lufthansa faces a new government that may be less accommodating. Germany’s €9 billion package saved the airline after the pandemic battered aviation worldwide.

“We are very grateful that Deutsche Lufthansa was stabilised with tax money in the most challenging of times,” Mr Spohr said in the statement, also saying the intervention saved more than 100,000 jobs.

The funds are being paid back earlier than the company expected, and with more countries opening their borders, “we are increasingly confident about the future”, Mr Spohr said.

Germany agreed to bail out Lufthansa early in the pandemic after travel bans forced fleets to be grounded. Repaying the aid would free the company from obligations the European Commission attached to its approval of the deal, such as a ban on dividends, management bonuses and any purchase of a stake of more than 10 per cent in a rival airline. While European airlines such as Lufthansa are now starting to recover from the crisis as short-haul flying resumes, vital markets such as the transatlantic remain largely closed, depriving them of their most valued revenue streams.