The European Commission today approved the Federal Government’s stabilisation package for Lufthansa.
said: “I welcome the European Commission’s decision to approve the State aid for Lufthansa. This clears the way for the support package to take effect. This is good news, because Lufthansa was operationally healthy and profitable before the Covid-19 pandemic and has good prospects. However, the current coronavirus crisis is posing a threat to the company’s survival. It is right and proper to provide assistance. More than a hundred thousand jobs are at stake, as is Germany’s position on the world markets. The Federal Government’s support package represents a good and balanced offer to Lufthansa, and it is now up to the general shareholders’ meeting to decide whether to accept it.”
Said Federal Minister of Finance Olaf Scholz: “Today is a decisive day for Lufthansa. The European Commission has given the go-ahead for the Federal Government’s support package. There is a good offer on the table, and Lufthansa’s shareholders should accept it. The Federal Government is offering support to Lufthansa and its more than one hundred thousand employees in an unprecedented emergency situation for which the company bears no blame. At the same time, the Federal Government’s support package upholds the justified interests of the tax-payers.”
The approval issued under State aid rules by the European Commission today covers the conditions for the stabilisation measures of the Economic Stabilisation Fund, which the Federal Government agreed on 25 May 2020 and which have been approved by the executive and supervisory boards of Lufthansa:
- acquisition of a Silent Participation I worth around €4.7 billion, which can be recognised as equity in line with IFRS;
- acquisition of 20% of the shares in Lufthansa for around €0.3 billion in the course of a capital increase;
- acquisition of another Silent Participation II worth around €1 billion which can be converted into shares under certain conditions (take-over/failure by Lufthansa to redeem the coupon) (at least another 5%).
A further component of the package is the syndicated financing of €3 billion already approved under the KfW Special Programme 2020, to which private banks are contributing €600 million.
This means that the approval under State aid rules covers a support package totalling €9 billion.
Lufthansa also commits to pursuing sustainability goals, including a renewal of its fleet. Far-reaching restrictions on pay are envisaged for the members of the executive board of the group and of the companies in the group, and for the management.
The shareholders in Lufthansa will be holding an extraordinary general shareholders’ meeting today to decide on the overall package to stabilise the company.