Lufthansa is hopeful its bailout talks with the German government can be concluded soon, the airline’s board told staff in a letter seen by Reuters, adding that it is also considering alternatives such as creditor protection.
Travel bans have forced the German group to ground 700 of its aircraft, leading to a 99% drop in passenger numbers and causing the group, which includes Swiss and Austrian Airlines, to lose about €1mn ($1.1mn) in liquidity reserves per hour.
“We estimate that these talks can lead to a conclusion soon,” chief executive Carsten Spohr and board members wrote in the letter, adding that they are also checking alternative options but do not expect to need them.
“We remain nevertheless convinced that we will not have to fall back on alternatives given the talks with Berlin.”
Lufthansa is negotiating a €10bn bailout that would result in the government taking a 25.1% stake in the airline, weekly paper Der Spiegel said on Friday.
Of that, 5.5bn euros would be in the form of non-voting capital, for which the government wants a coupon of 9%, the paper said.
A further €3.5bn in loans would be provided by state bank Kreditanstalt für Wiederaufbau (KFW), the paper said, adding that Belgium, Austria and Switzerland might contribute towards the bailout.
Reuters reported on Wednesday that Lufthansa is negotiating a €9bn bailout, with loans from Austria, Germany and Switzerland, citing a source close to the matter.
The slump in travel due to the coronavirus pandemic has led to a sweeping restructuring of the airline industry, with other carriers also seeking state bailouts.
Finance Minister Olaf Scholz told the Passauer Neue Presse newspaper at the weekend that “taxpayers can count on us not to conduct these talks naively.”
“Up until the corona pandemic, we as the Lufthansa Group were competitive and successful. We were hit by this crisis through no fault of our own. We therefore now need government support, but we do not need government management,” Carsten Spohr said in a speech released late on Thursday.
Reuters reported on Wednesday that Lufthansa is negotiating a 9bn euro bailout, with loans from Austria, Germany and Switzerland, citing a source close to the matter.
A German government source confirmed to Reuters that negotiations were ongoing and Scholz, told the Passauer Neue Presse newspaper that “taxpayers can count on us not to conduct these talks naively.”
The talks, which are with the German, Austrian and Belgian governments and Kreditanstalt für Wiederaufbau (KFW), are centred around setting conditions for a bailout and its repayment, Spohr’s speech said.
“At the moment we are not only discussing the levels of the necessary amounts, but are also negotiating the conditions and timelines as to when this help can be made available,” a transcript of the speech showed.
Switzerland’s government has already given Lufthansa assurances for a loan that will be guaranteed largely by the Swiss state, Spohr said.
“We must already develop a plan today for how we can repay the government loans and investments as quickly as possible,” Spohr said.
To save cash, it has said it will reduce its fleet by 100 planes and cut its workforce by 10,000. Der Spiegel, citing unnamed sources familiar with the talks, said that as part of the bailout €5.5bn would be provided in the form of non-voting capital, for which the German government wants a coupon of 9%. A further €3.5bn in loans would be provided by KFW, the paper said, adding that Belgium, Austria and Switzerland might contribute towards the bailout.
Spohr urged politicians to ensure that aid does not hamper Lufthansa’s chances going forward. “If we want to compete globally against the three major airline groups in the USA, China and the Gulf Region, then we will only be able to do so as a European airline group,” he said in the speech.
The group’s liquidity is currently still above €4bn, Spohr said.
“The question is whether we can avoid bankruptcy,” he said.
from Gulf Times https://ift.tt/2z3E9mv
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