Lufthansa saved from collapse with government aid package

Lufthansa looks set to have avoided bankruptcy by drawing on a €9 billion aid package from the German government after the group secured formal approval from European Union antitrust regulators and shareholders for the bailout.

Germany’s Economic Stabilisation Fund will supply up to €5.7 billion in funding. In the process, the German government will take a 20% stake in the airline through an increase in its capital.

In his bid to shareholders, Lufthansa Group CEO Carsten Spohr stated that state aid was the only way for the integrated aviation group to finance the restart of operations of the largely grounded fleet and establish a “new normal” over the next few years. “We are asking for nothing less than your approval to save the German Lufthansa. The bitter truth is that legal insolvency is looming if we do not agree on this stabilization package,” he said. Lufthansa lost €1.2 billion in the first quarter of 2020 and said last month that it was burning through €1 million in cash every hour.

“The decision by our shareholders provides Lufthansa with a perspective for a successful future,” said Spohr in a media statement. “On behalf of our 138,000 employees, I would like to thank the German federal government and the governments of our other home countries [meaning Germany, Switzerland, Austria, and Belgium, where its various airline divisions are based] for their willingness to stabilise us.” He stressed that the company will repay taxpayers as soon as possible.