Billionaire businessman Heinz Hermann Thiele had been threatening to block the deal, which was agreed with the government late last month, in a virtual meeting on Thursday. But with just a few hours before the vote, Thiele relented, telling the German newspaper Frankfurter Allgemeine that he will vote for the resolution.
Thiele is the majority shareholder of the German Knorr-Bremse group, a leading global provider of braking systems for rail and commercial vehicles. In an interview with Frankfurter Allgemeine Sonntagszeitung last week, the billionaire said he was unhappy with the terms of the bailout, which would give the government a 20% stake in Lufthansa and dilute the value of its own 15% stake.
In response to Thiele’s comments over the weekend, Spohr said securing the two-thirds majority necessary to approve the bailout “seems uncertain.” If shareholders reject the plan, the airline has made “extensive preparations” to prevent its planes from being grounded and “would discuss options” with the government before filing for insolvency, Spohr said in the letter to employees.
Time is running out. Lufthansa lost € 1.2 billion ($ 1.3 billion) in the first quarter and said last month that it was spending € 1 million ($ 1.1 million) in cash every hour. She had € 4 billion ($ 4.5 billion) in cash on May 5.
“The rational decision under the circumstances would be for shareholders to accept the deal that’s on the table,” said Per-Ola Hellgren, investment analyst and director of German bank Landesbank Baden-Württemberg.
Voting against the deal would mean “taking a big risk” and could force Lufthansa to initiate insolvency proceedings, he added. On the other hand, due to the urgency of the situation, the German government could have relented and agreed to change the terms of the deal to suit shareholders, Hellgren told CNN Business.
Global aviation is not expected to recover from the pandemic for several years. Lufthansa, the owner of airlines in Germany, Switzerland, Austria and Belgium, is planning a radical restructuring program that would cut its fleet by 13% and could generate up to 22,000 job cuts.
Germany’s bailout will give the government the right to appoint two members of the company’s supervisory board, which analysts say could hinder restructuring efforts.
Lufthansa risks being less competitive and less able to attract investment in the future if restructuring plans are delayed, said Neil Glynn, head of European transport capital research at Credit Suisse.