Lufthansa’s salvation will cost Germany EUR 9 billion

According to the terms of the agreement, the German government will receive 20% in Lufthansa and two seats on the board of directors.

The German government and the leadership of Lufthansa Airlines reached a preliminary agreement on a plan to save the company for 9 billion euros, Reuters reported, citing two sources familiar with the situation.

It is noted that the agreement still needs to get the approval of the steering committee of the German fund, which is engaged in state assistance in the fight against the pandemic, as well as the councils of Lufthansa and the European Commission.

Lufthansa declined to comment on the situation to the agency. The Ministry of Economics of Germany noted that the negotiations are at the last stage, but formally not yet completed.

The deal provides for the German government to have two seats on the company’s supervisory board. It is noted that government representatives will take part in the vote only in a special case, for example – on the acquisition of the company. Also, the government will receive a 20% stake in Lufthansa.

The airline expects that the terms of the transaction will include the rejection of dividends and limitation of remuneration to top managers.

Last week, it became known that negotiations on the provision of state assistance to Lufthansa, the airline, had reached the “finish line”. Earlier, The Wall Street Journal reported that the airline may refuse state support in the form of a loan due to an increase in the debt burden. Also, the airline was not tired of the fact that as a result of the agreement, the government would receive two seats on the board of directors and broad powers.

Recall that the suspension of air traffic due to the coronavirus pandemic led to the fact that Lufthansa received $ 1.3 billion in a net loss in the first quarter of 2020.

Graduated from Embry-Riddle Aviation University with a master's degree in aviation science. He began his career as an aviation researcher in local periodicals. Has a pilot license. Now are the author and developer of the Plane Worlds.