[ad_1]
The airline urgently needs help to avoid bankruptcy, but apparently not at any cost. Now he is examining drastic alternatives of how he can survive despite everything.
Negotiations for possible government aid to Lufthansa threaten to topple. According to SZ information, the company rejects the federal government’s conditions for a state aid package and is apparently now considering requesting a so-called protective shield procedure. Representatives of the federal government had told Lufthansa representatives on Monday under what conditions the state would be willing to help the largest German airline in the Corona crisis and avoid bankruptcy. Officially, the company does not want to comment on the events.
Lufthansa is one of the companies most affected by the Corona crisis in Germany. It also carries around one percent of ordinary passengers, also due to state-imposed travel restrictions, and burns around one million euros an hour. More recently, it still had reserves of € 4.4 billion, but it expects a very large liquidity loss in the coming weeks. This is one of the reasons why CEO Carsten Spohr recently made it clear that Lufthansa cannot survive without the help of the state.
Negotiations at the secretary of state level, it is said in Berlin, have shown big differences, so the deal is still a long way off. Consequently, the federal government wants to buy a stake of at least 25 percent, would hold two seats on the supervisory board, and would have a so-called blocking minority. Lufthansa would receive a total of around € 9 billion in the form of a capital increase and loans. However, the government would have proposed an interest rate of nine percent.
On the one hand, the airline has an urgent interest in obtaining help, but on the other hand, it wants to give the state as little voice as possible so that it does not enter into political restrictions and that corporate decisions have to be subject to political considerations. The high interest burden is just one of several points that Lufthansa management does not accept. According to current SZ information, it would mean around half a trillion euros in additional costs per year, money that would be lacking for investments.
In addition, the Lufthansa Supervisory Board has 20 members and is made up of an equal number of employer and employee representatives. The two representatives of the federal government, along with employees, have a majority in the body and could avoid job cuts or the controversial closure of subsidiaries like Germanwings. The hostess union UFO requires that the state, as a donor, “actively influence” companies so that the money can be used to achieve the “goals of the general public.”
Industrial circles also say it is questionable whether the European Commission would approve such a massive state entry.
Competitor Condor is already in the protection process
According to information from corporate circles, Lufthansa is now toying with other variants of how it can survive despite everything. As a possible plan B, strategists are going through a protective shield procedure, as vacation airline Condor is already doing it with some success. The procedure is a special case of German insolvency law and is designed for companies that are actually healthy but have encountered difficulties due to special circumstances. Management would continue to run the company under the supervision of an alleged administrator. However, it could get rid of many inherited problems, like pension obligations, like in regular bankruptcy.
However, it is highly questionable whether this actually happens, because the negotiations with Berlin continue. In view of the dramatically rapid outflow of funds, Lufthansa no longer has much time, especially since it must also be interested in starting a protection procedure with sufficient liquidity. Competitor Condor has been through this process since the collapse of its former parent company, Thomas Cook. Condor had also received government guarantees worth € 380 million to continue flight operations. At the beginning of the week, the federal government and the state of Hesse approved additional aid in the amount of 550 million euros for Condor, part of which will be used to pay the original loan.
Digitization in schools: what has to happen?:Readers’ discussion
