Lufthansa agrees on a €9 billion bailout

Tuesday, May 26, 2020

To avoid financial collapse in the wake of the Covid-19 outbreak, Lufthansa has been severely affected by a decline in travel during the pandemic and has agreed a €9 billion bailout with the German federal government.

The Economic Stabilisation Fund (WSF) will take a 20 per cent stake in the airline, which it hopes to sell by 2023 and as part of the package, the German government will also inject €5.7 billion in non-voting capital, known as a “silent participation”.

Part of these funds can be converted into an additional five per cent equity stake and will enable the German government to veto any potential hostile takeover bids.

 After weeks of talks between Lufthansa and the German government about financial aid  will help save up to 10,000 jobs.

A fund of €100 billion has been set aside by the German  government to help shore up companies struck down by the pandemic.

 But the final approval of the management board and the supervisory board of Lufthansa is still  required. Additionally, the capital measures are subject to the approval of an extraordinary general meeting and  the stabilisation package is subject to the approval of the European Commission and any competition-related conditions.

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