Guest

Did LH Get A Gov't Bailout After 9/11?

Tue Dec 11, 2001 2:08 am

I was reading the latest Airways, Jan 2002. There was an article going through all the major airlines and their status after September 11. Under Lufthansa, it said that it was asking the government for a 163million bailout? Is this true and did they get it? Can anyone confirm this?

If yes, how can they now order 15 A380s? Doesn't seem right.

I have read some posts that had very strong opinions, not approving on the bailout that was provided to the US majors, then this came to mind.

Any thoughts, comments?

Pinamar
 
racko
Posts: 4548
Joined: Tue Nov 06, 2001 12:06 am

RE: Did LH Get A Gov't Bailout After 9/11?

Tue Dec 11, 2001 2:24 am

Lufthansa is completely against governments supporting their airlines, because this keeps financial dead airlines alive. But after the huge bailout the us airlines received from their government (and which of course gave us airlines a huge advantage over LH and BA (or did the british government support them? i didnt hear anything), because us airlines can offer lower transatlantic fares than they could without the money from their government), Lufthansa went to the german government and wanted some money for the time the US airspace was closed, but not for any other money loss the terror attacks caused.

In fact,
If the US government hadn't supported their airlines with way too much money, Lufthansa would have wanted any money from the german government either.

But i think everyone agrees that it is completly unfair that some airlines receive so much money from their government and use it to steal "profitable" airlines their pax. A
And please don't tell me that united, continental etc. were profitable before the terror attacks.
 
D-aqui
Posts: 207
Joined: Wed Sep 26, 2001 7:16 pm

RE: Did LH Get A Gov't Bailout After 9/11?

Tue Dec 11, 2001 2:25 am

I have not read anything concerning a government grant in any German media, particularly as LH will still make a profit this year.

xxx
 
UAL_777_Pilot
Posts: 75
Joined: Wed Dec 05, 2001 5:31 am

RE: Did LH Get A Gov't Bailout After 9/11?

Tue Dec 11, 2001 2:26 am

If I am not mistaken , LH was Bailed out by the governemnt . I think the 163 million is correct . However , they still would like to continue thier ambitions to expand their route network. And purchase the new A380!
 
Guest

RE: Did LH Get A Gov't Bailout After 9/11?

Tue Dec 11, 2001 2:26 am


Racko, I agree with you !
 
Flying-Tiger
Posts: 3923
Joined: Mon Aug 23, 1999 5:35 am

RE: Did LH Get A Gov't Bailout After 9/11?

Tue Dec 11, 2001 2:40 am

UAL777Pilot: I think "Bailed Out" is the wrong phrase here. They got a - comparibly small - amount of money to cover costs directly related to the closing of the air space. Nothing wrong with this, these are costs nobody could have foreseen in advance.

Regards
Flying-Tiger
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Guest

RE: Did LH Get A Gov't Bailout After 9/11?

Tue Dec 11, 2001 3:09 am

Racko, thanks for clearing it up. I couldn't tell you wether United and or Continental were profitable before 9/11. I don't live in the US and the only us Airline(s) that I've flow have been Pan Am, Braniff and American, never tried United from Buenos Aires, more expensive than American.

The article is misleading, hope you can understand what I was trying to say.
Lets say, an employee of mine came to me and asked me for an advance because of the difficult times were are having, and then I see him with a new car!!... I would have some questions?

I also agree with Flying-Tiger: "Bailed Out" is the wrong phrase.

Thanks,
Pinamar
 
Flying-Tiger
Posts: 3923
Joined: Mon Aug 23, 1999 5:35 am

RE: Did LH Get A Gov't Bailout After 9/11?

Tue Dec 11, 2001 3:18 am

Just read that Lufthansa has yet to recieve a single Euro-Cent of the money which has already been cleared by the EC. So I was even wrong: no tax money to date.

Regards
Flying-Tiger
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Klaus
Posts: 20578
Joined: Wed Jul 11, 2001 7:41 am

RE: Did LH Get A Gov't Bailout After 9/11?

Tue Dec 11, 2001 8:52 am

It´s not actually a direct bailout. Instead, LH got a federal guarantee when its insurers cancelled (in essence broke) their contracts.

Just today, chancellor Schröder announced that - contrary to initial intention - LH won´t have to pay any premiums for this "government insurance".

So in a sense, LH got government assistance. (Amounting to the saved premium payments.)
 
D-aqui
Posts: 207
Joined: Wed Sep 26, 2001 7:16 pm

RE: Did LH Get A Gov't Bailout After 9/11?

Tue Dec 11, 2001 5:51 pm

Klaus,

I have heard your information on the German news last night as well, it is absolutely correct.
Although this might be seen as an indirect subsidy it is only what other governments have done in order to allow airlines flying at all because after the breach of contract the premiums from the insurance companies would have been astronomically high.

D-AQUI
 
 
Andreas
Posts: 5880
Joined: Tue Oct 09, 2001 7:56 pm

RE: Did LH Get A Gov't Bailout After 9/11?

Tue Dec 11, 2001 9:06 pm

For all of you not speaking German, I've enclosed a Reuters news update from yesterday evening.
To Pinamar: Yes you are right, all large US carriers were financially unstable, to say the least, before sept. 11th.
Regards
Andreas

FRANKFURT, Dec 10 (Reuters) - German Chancellor Gerhard Schroeder said on Monday that national airline Lufthansa AG would not have to pay premiums for the
government-backed aviation insurance scheme running since the September 11 hijacked plane attacks on the United States.
Speaking at a meeting of the German airline's staff in
Frankfurt, Schroeder said that as far as he was aware other European governments were also paying the premiums for their airlines under the European Union-approved scheme to provide adequate third party liability war risk cover.
Lufthansa shares were steady on the news, trading 1.93 percent higher at 15.86 euros by 1736 GMT and leading gainers on the blue-chip DAX index, which fell 1.4 percent.
EU governments agreed to guarantee cover for the aviation sector after commercial underwriters effectively withdrew third party liability aviation insurance for acts of war and terrorism following the U.S. attacks.
Airlines had already been allowed to defer premium payments for the state-backed coverage until European Union rules were agreed on.
The current state coverage runs out in January but can be extended to the end of March.
Schroeder said government ministers would meet with insurers and Lufthansa representatives again before Christmas to discuss coverage after the state guarantees end, and said he would push for commercial insurers not to increase their rates as planned.
Separately, Schroeder said the airline industry was one of the worst affected by the attacks and said it would be unfair if Lufthansa had to make up for that on its own.
However, the chancellor made no mention of the 180 million euros ($160 million) in compensation the airline is seeking for the month of September as a result of the attacks.
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