Lufthansa Says It Aims to Repay German Aid by September Vote
Lufthansa Says It Aims to Repay German Aid by September Election
(Bloomberg) -- Deutsche Lufthansa AG said it plans to repay billions of euros in aid from the German government before the country’s federal election on Sept. 26.
Europe’s biggest airline is working on measures to secure the refinancing “hopefully before the general election,” Chief Executive Officer Carsten Spohr said at Germany’s National Aviation Conference.
The comments are a sign of increasing confidence that a shaky comeback of air travel from the coronavirus crisis will finally take hold. Lufthansa is one of the companies that’s set plans to raise capital as the outlook improves. Germany said Friday that more than 50% of its people have now received at least one vaccine dose, while the European Union separately gave the final go-ahead for a reopening of travel with the U.S.
Paying back the government aid would free Lufthansa from restrictive conditions the European Commission attached to its approval of the bailout last year. Those terms include a ban on dividends and management bonuses and prevent Lufthansa from acquiring more than a 10% stake in a rival airline.
With Chancellor Angela Merkel set to step down, Lufthansa would avoid any uncertainty tied to dealing with the next German leader.
“We were one of the first companies to be saved by the federal government,” Spohr said to Merkel at the opening ceremony of the conference. “We also want to be one of the first companies to repay the rescue funds.”
Rights Issue
Lufthansa said Tuesday it had appointed Bank of America Corp., Deutsche Bank AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co. to help with a capital raising after receiving 9 billion euros ($11 billion) in bailouts to help survive the coronavirus crisis. People familiar with the matter have said it’s aiming to garner 3 billion euros via a rights issue.
Lufthansa also said this week it’s seeking to reduce annual expenses by 3.5 billion euros through cuts to labor, office and other costs in a bid to bolster earnings as the travel industry begins to emerge from the pandemic.
Shares of Lufthansa advanced 1% to 10.53 euros as of 1:04 p.m. in Frankfurt. The stock has trimmed its losses for the year to 2.6%.
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