Berlin to cut stake in Lufthansa from 20% to 15%

Germany’s Finance Agency (Bundesrepublik Deutschland Finanzagentur – BDF) revealed on August 16 that the stabilisation fund assembled to keep Lufthansa (LH, Frankfurt Int’l) and other companies afloat during the pandemic will cut its shareholding in the company.

The German state via the Economic Stabilisation Fund (Wirtschaftsstabilisierungsfonds – WSF) has held a 20% stake in the majority privately-run flag carrier since it acquired the shareholding for EUR300 million euros (USD353.5 million) as part of last year’s EUR9 billion euro (USD10.6 billion) bailout package including EUR6 billion (USD7 billion) from the WSF.

“The WSF will reduce its shareholding over several weeks, depending on the market conditions, to a limited extent, but by a maximum of a quarter (5%), starting today,” the agency said in a statement. “The WSF will continue to support DLH within the framework of the stabilisation measure granted.”

The move can be explained, it said, by “the background of the currently communicated positive corporate development” at Lufthansa, “after the first successes of the future-oriented measures” at the company and “taking into account the interests of both sides.”

The fund has said it will sell the complete stake, which is currently worth more than EUR1 billion (USD1.2 million), by the end of 2023.

Lufthansa is meanwhile continuing to make preparations for a capital increase of up to EUR5.5 billion (USD3.5-6.5 billion), with the issue of new shares likely to occur before the upcoming September 26 parliamentary elections according to local media – a measure that will help it to return bailout funds to taxpayers.

It has already boosted its liquidity by raising a further EUR1 billion euros (USD1.2 billion) in a corporate bond sale on July 7, on top of drumming up EUR1.6 billion (USD1.9 billion) in a bond issue on February 4. Lufthansa halved its losses in the second quarter of 2021 year-on-year and is expecting a return to profit later this year.