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Terrier79
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 1:07 pm

Noshow wrote:
The german government was pretty straightforward with it's requirements.Take it or leave it LH.

Ah, you were in the room while they negotiated? Interesting.

Fact is: There has been zero official announcements more than that there are negotiations ongoing. Everything else is just rumors, indiscretions, wishful thinking but definitely not fact. Let’s wait for an official statement.
 
max999
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 1:38 pm

Flying-Tiger wrote:
max999 wrote:
Blerg wrote:

So what's the big deal even if they go into chapter 11? I mean why are they blackmailing the government with that action?


If LH management is so adamantly against the government's conditions, they could raise money on the financial markets. But seeing how LH has not announced anything about borrowing from the markets, I guess they are balking at the interest rates they would be forced to pay.

In summary, LH management is arrogant; they want to have their cake and eat it, too. They want no strings from the government, but they are also too cheap to pay the interest that's being asked.


In all honesty: that´s their job. They DO have to find the best deal for the company, and if this means hard negotiations so be it.

Every percent in interest saved on a 10 bn bail-out package means saving 100 million EUR less needed to day for it. Or in other words: at least one additional A321neo. That is certainly something worth fighting for, especially if your regional competitors might have gotten a better package than what is currently offered to yours.

There is no level playing field, and you need to negotiate the best deal for your company if you´ve the chance.


I say LH management is arrogant because they are out of line when compared to their competitors. AF accepted the French government's bailout with the government's conditions. Almost every major US airline accepted the bailout with the conditions outlined in the CARES Act.
All the things I really like to do are either immoral, illegal, or fattening.
 
leghorn
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 1:46 pm

I really don't see the need to bail them out as other airlines especially LCCs will jump on the routes they vacate.
Lufthansa will vacate less profitable routes which they can't make money on but which LCCs or airlines with smaller efficient planes will operate.
The routes which don't get picked up will have to be incentivised through a PSO which all carriers will compete for and if an LCC or an ATR42/72 operator picks up those routes and gets paid for it then it will still cost much less than 10BN in total.
LCCs will abandon some of their less profitable commercial routes to pick up what Lufthansa dropped and if the routes which the LCCs end don't continue to exist then were they really beneficial routes to begin with so are no loss.
 
Noshow
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 1:57 pm

I consider it rather bizarre that a private company that had cried for help now refuses to accept it because it prefers everything as donation only. Other companies fold by the thousands these days and LH insists they want the entire can of coke. Maybe it's time to withdraw the government's offer to help?
 
LJ
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 2:23 pm

max999 wrote:
I say LH management is arrogant because they are out of line when compared to their competitors. AF accepted the French government's bailout with the government's conditions. Almost every major US airline accepted the bailout with the conditions outlined in the CARES Act.


The French (and Dutch) government didn't ask for 25% of the company for the support which AF/KL received. Thus the German government imposes stricter conditions as they did with Condor and what the French and Dutch have done.
 
Noshow
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 2:28 pm

That is their right to do so. There is no obligation to give LH what others got elsewhere? We are talking about loaning quite some bit of money. It's in the interest of the taxpayer to get some reward for the bailout.
 
Westerwaelder
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 2:37 pm

Noshow wrote:
That is their right to do so. There is no obligation to give LH what others got elsewhere? We are talking about loaning quite some bit of money. It's in the interest of the taxpayer to get some reward for the bailout.


Asking for a €10 billion package with essentially no strings attached feels just wrong. I would consider it reasonable for the government to take a stake. Not to interfere in say to day but in big strategic questions impacting on the workforce. I know it's controversial in here but who would invest that amount of money with no influence?
 
fraT
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 2:57 pm

Westerwaelder wrote:
Noshow wrote:
That is their right to do so. There is no obligation to give LH what others got elsewhere? We are talking about loaning quite some bit of money. It's in the interest of the taxpayer to get some reward for the bailout.


Asking for a €10 billion package with essentially no strings attached feels just wrong. I would consider it reasonable for the government to take a stake. Not to interfere in say to day but in big strategic questions impacting on the workforce. I know it's controversial in here but who would invest that amount of money with no influence?


Security is one thing but influence the other one. Governments have never been good decision makers in the airline industry.

People who think that LH can survive with the current workforce are dreamers. So even if they get the money they won't be able to keep all their employees. But that is where at least some politicians want to have a say. Same goes for the routes. for example cutting the NUE-FRA and NUE-MUC flights won't help anybody besides the ones like TK, AF, KL who will still be able to offer flights to/from NUE connecting at their hubs. All of them are paying very limited taxes in Germany and employ only a few people. So these are only two examples about opinions from politicians in recent days/weeks. Let the LH management do their stuff and the government will get a lot of the money back, be it by repaid loans or taxes. It's not as if LH was a poor performer in recent years. And I highly doubt that an insolvency would save more employees.
 
MIflyer12
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 2:59 pm

leghorn wrote:
I really don't see the need to bail them out as other airlines especially LCCs will jump on the routes they vacate.
Lufthansa will vacate less profitable routes which they can't make money on but which LCCs or airlines with smaller efficient planes will operate.
The routes which don't get picked up will have to be incentivised through a PSO which all carriers will compete for and if an LCC or an ATR42/72 operator picks up those routes and gets paid for it then it will still cost much less than 10BN in total.
LCCs will abandon some of their less profitable commercial routes to pick up what Lufthansa dropped and if the routes which the LCCs end don't continue to exist then were they really beneficial routes to begin with so are no loss.


You sound pretty sanguine. You ought to look at the set of destinations served by LH only from FRA and MUC and try to identify who will jump in to replace them. IMHO it'll be pretty sobering. Ryanair isn't going to jump on FRA-EZE - nor would AR in all likelihood. You'll find dozens of examples. What's the long-term damage to German industry from the loss of connectivity?
 
Waterbomber2
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 3:46 pm

LJ wrote:
max999 wrote:
I say LH management is arrogant because they are out of line when compared to their competitors. AF accepted the French government's bailout with the government's conditions. Almost every major US airline accepted the bailout with the conditions outlined in the CARES Act.


The French (and Dutch) government didn't ask for 25% of the company for the support which AF/KL received. Thus the German government imposes stricter conditions as they did with Condor and what the French and Dutch have done.


There is a huge difference between a capital injection and a loan that needs to be repaid.

If LH wants the government to inject capital without issuing them shares, they're essentially asking for a cash grant, helicopter money, a gift, a donation, a blank check, call it what you want.

While there at it, can Germany also send some money to my account? I was a good boy, I promise.
 
blueflyer
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 4:13 pm

LJ wrote:
The French (and Dutch) government didn't ask for 25% of the company for the support which AF/KL received. Thus the German government imposes stricter conditions as they did with Condor and what the French and Dutch have done.

No, they asked for an end to all domestic flights where a train ride of 2.5 hours is an alternative, unless the flight begins or ends in Paris, and for Air France to be a leader in environmentally friendly flying. Are you saying that somehow because France and the Netherlands were first to reach an agreement with their carriers, that is the model that all other governments must follow in negotiating with their carriers? Is Lufthansa prepared to accept those conditions? Including a ban on most domestic flights out of FRA and MUC? Because surely if the airport where domestic flights are allowed in France is Paris, then for Germany it must be Berlin.

(not to mention that together France and the Netherlands already own 28% of AirFrance/KLM and have seats on the board)
 
Noshow
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 4:39 pm

I have not heard of any planned domestic flight bans in Germany. Some domestic flying has ended on high speed train routes because train rides are more convenient - not because they might be cheaper. They often are not.

Latest rumors are that as we speak the government has sent some representative to Lufthansa's HQ to hand over the final negotiation offer mentioned above. Looks like decision time has come.
 
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Terrier79
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 6:25 pm

“German Chancellor Merkel Says Lufthansa Bailout Deal Is Close” - https://www.bnnbloomberg.ca/german-chan ... -1.1438941

All German media report the deal is done, details to follow soon.
 
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nordikcam
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 6:45 pm

blueflyer wrote:
LJ wrote:
The French (and Dutch) government didn't ask for 25% of the company for the support which AF/KL received. Thus the German government imposes stricter conditions as they did with Condor and what the French and Dutch have done.

No, they asked for an end to all domestic flights where a train ride of 2.5 hours is an alternative, unless the flight begins or ends in Paris, and for Air France to be a leader in environmentally friendly flying. Are you saying that somehow because France and the Netherlands were first to reach an agreement with their carriers, that is the model that all other governments must follow in negotiating with their carriers? Is Lufthansa prepared to accept those conditions? Including a ban on most domestic flights out of FRA and MUC? Because surely if the airport where domestic flights are allowed in France is Paris, then for Germany it must be Berlin.

(not to mention that together France and the Netherlands already own 28% of AirFrance/KLM and have seats on the board)


Ouch...Schiphol Bruxelles Midi with Thalys is 1h40 and Bruxelles Midi CDG possible in 1h00...because the Thalys Bruxelles Midi Paris Nord is 1h10...end of the connections between CDG and Schiphol ??
 
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ua900
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 8:26 pm

Waterbomber2 wrote:
There is a huge difference between a capital injection and a loan that needs to be repaid.

If LH wants the government to inject capital without issuing them shares, they're essentially asking for a cash grant, helicopter money, a gift, a donation, a blank check, call it what you want.

While there at it, can Germany also send some money to my account? I was a good boy, I promise.


Did the German government shut down your business? Then they should compensate you. It's not like this was LH's mistake. Altmaier is on the record for saying that the government shouldn't interfere in company decisions. Then what about the government decision in March to effectively shut them down for 30 days, then another 30 days, then another 30 days?

Even cash grants come with strings attached, see the US 3 for example or AF/KL. There's still a long road ahead to restoring the passenger volumes projected post-June 15th when things open up again, some kind of compensation for the government interference will be needed.

Terrier79 wrote:
“German Chancellor Merkel Says Lufthansa Bailout Deal Is Close” - https://www.bnnbloomberg.ca/german-chan ... -1.1438941

All German media report the deal is done, details to follow soon.


Well, the internal government bickering between Altmaier and Scholz is done. Anyone's guess what the terms are and whether LH will accept. They still have options.

Noshow wrote:
I have not heard of any planned domestic flight bans in Germany. Some domestic flying has ended on high speed train routes because train rides are more convenient - not because they might be cheaper. They often are not.

Latest rumors are that as we speak the government has sent some representative to Lufthansa's HQ to hand over the final negotiation offer mentioned above. Looks like decision time has come.


The press release stated that it was a compromise between Altmeier and Scholz, presumably mediated by Merkel. Since Altmeier wanted to keep LH as is, and Scholz wanted to cut routes and interfere in business decisions on what routes to fly, it would make sense for the offer to contain route cuts, e.g. fewer German domestic routes, maybe a need for LH to focus on more on FRA for domestic flights in lieu of MUC or the domestic point to point formerly done by Eurowings.

As for the convenience of replacing domestic air routes with train routes, from my experience in Germany it doesn't work too well when connecting to the US due to a lack of German service workers and complicated booking mechanisms. As someone who frequently travels for two kids and 3 suitcases at 70 lbs per person (e.g. 9 for a trip with my kids) it gets complicated, Europe isn't geared towards that. In Newark for example, you can hire someone on the spot, nice when your flight changes for around $5 per suitcase. In Frankfurt, on the other hand, you'll need reservations that need to include the date, time, flight number, train number, train car number, and seat number. God forbid anything changes. €72 later you'll be at the ICE train station. Of course, you'll still someone to unload it at your destination and pay for that as well. By the time you're done and at home, a lot of time could pass.

It's $0 to have your luggage transferred by plane on your connecting flight, seamless to the passenger. You and your fellow travelers can head over to the Senator lounge, enjoy some food and get some rest, while a lot of work is done below deck. Then at your destination, there's a rental car waiting for you, which can be brought directly to the terminal with something like Hertz Platinum, even in Europe. What I'm seeing is a movement to make travel ever harder in Germany, with generous exemptions for politicians, I've seen their motorcade stand in no-parking zones blocking half the terminal many times before. Anyone who want to make things harder for regular citizens should be relegated to the same travel experience.

Blerg wrote:
If SN does go bankrupt and the government nationalizes it, does it mean LH is out for good? They are taking over their shares in the company? Do we know how much longer SN can last without receiving government aid?


LH seems to want to use SN for the type of flying formerly assigned to EW, plus the transcontinental SN legacy routes, especially in Africa. As someone who used to fly the old SN into places like THF and has always enjoyed transfers at BRU, in my view SN's esprit de corps has suffered quite a bit under LH ownership. If I were the Belgian (or the Austrian) government I'd be careful to ensure that any commitments see my former national airline as a good representative of my country. OS coffee service, for example, is great advertising for Vienna coffeehouses. For LX, they have the Taste of Switzerland and the collaboration with the Peninsula in Asia. While SN has the Neuhaus Corner in BRU, there's presently no pendent on board, and charging even for pop reeks of EW, not of a national carrier.
2020: AMS | BRU | DEN | DFW | EWR | FRA | IAH | LAX | MCO | MUC | ORD | PTY | SFO | TXL
 
Noshow
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 8:27 pm

The government share is said to be below 25 percent first, so no veto, but later changed beyond that by so called "Wandelanleihe" (trading bond). Finally the government WILL have some veto right.
 
LJ
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 8:32 pm

blueflyer wrote:
LJ wrote:
The French (and Dutch) government didn't ask for 25% of the company for the support which AF/KL received. Thus the German government imposes stricter conditions as they did with Condor and what the French and Dutch have done.

No, they asked for an end to all domestic flights where a train ride of 2.5 hours is an alternative, unless the flight begins or ends in Paris, and for Air France to be a leader in environmentally friendly flying. Are you saying that somehow because France and the Netherlands were first to reach an agreement with their carriers, that is the model that all other governments must follow in negotiating with their carriers?


No, and nowhere in my reply did I imply such a thing. I responded to someone who implied that LH should accept the bail out term because AF did so.


blueflyer wrote:
Is Lufthansa prepared to accept those conditions? Including a ban on most domestic flights out of FRA and MUC? Because surely if the airport where domestic flights are allowed in France is Paris, then for Germany it must be Berlin.


First, as already mentioned in the AF/KL Masterthread, the French government didn't ban all domestic flights (only P2P, thus flights which carry connectiing traffic only are still allowed even when within the 2.5h). Second, those flights were probably loss making for AF anyway thus not a real sacrifice. Third, we don't know if the German government wants to reduce domestic flights and by how much (the Greens probably will, CDU I'm not so sure about).

blueflyer wrote:
(not to mention that together France and the Netherlands already own 28% of AirFrance/KLM and have seats on the board)


You do realise that having two governments in the boardroom with sometimes opposite interests can create problems? Or do you think Ben Smith is happy having these two shareholders? I sincerly doubt it (though it was usuafull iin this crisis).

Waterbomber2 wrote:
There is a huge difference between a capital injection and a loan that needs to be repaid.


The German government could also say "if you don't want us on the Board, we'll provide you with loans and/or state guarantees for which you pay x%". Yet as far as we know this proposal hasn't been done (though it may have been done but we just didn't hear about it).
Last edited by LJ on Wed May 20, 2020 8:36 pm, edited 1 time in total.
 
T4thH
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 8:32 pm

Terrier79 wrote:
“German Chancellor Merkel Says Lufthansa Bailout Deal Is Close” - https://www.bnnbloomberg.ca/german-chan ... -1.1438941

All German media report the deal is done, details to follow soon.


It seems, someone is on the way from Berlin to Frankfurt for signature. So seems, it will signed soon or has already.
Seems they try to sign it still on 20-May-2020, tomorrow is holiday in Germany.
 
Waterbomber2
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 8:47 pm

I'll believe it when I see it.
The deal has been close for weeks now.
 
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Terrier79
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 8:52 pm

ua900 wrote:
Terrier79 wrote:
“German Chancellor Merkel Says Lufthansa Bailout Deal Is Close” - https://www.bnnbloomberg.ca/german-chan ... -1.1438941

All German media report the deal is done, details to follow soon.


Well, the internal government bickering between Altmaier and Scholz is done. Anyone's guess what the terms are and whether LH will accept. They still have options.

You don’t know Merkel obviously. If she stands in front of press and states that the deal is very close, it’s done. No way she talks to press without Spohr having agreed already.


T4thH wrote:
Terrier79 wrote:
“German Chancellor Merkel Says Lufthansa Bailout Deal Is Close” - https://www.bnnbloomberg.ca/german-chan ... -1.1438941

All German media report the deal is done, details to follow soon.


It seems, someone is on the way from Berlin to Frankfurt for signature. So seems, it will signed soon or has already.
Seems they try to sign it still on 20-May-2020, tomorrow is holiday in Germany.


That’s been reported. The holiday however, is of no matter. Those things are dealt with no matter whether it’s a holiday or not.
 
T4thH
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 9:22 pm

OK, someone is on the way to Frankfurt to present the agreement of the government to Lufthansa.
But seems it will need time till signature, shareholders have to agree, as government wants 25 % of the share + one stock and 2 seats in the board e.g.
Think we will have to wait till we see an official statement, as till now, the conditions of the agreement has to be stated as "rumor".
https://www.spiegel.de/wirtschaft/unternehmen/coronakrise-regierung-einigt-sich-auf-lufthansa-rettung-a-a017ac3b-c1af-4039-b7b9-8b74d376107b
 
oldJoe
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 9:49 pm

leghorn wrote:
I really don't see the need to bail them out as other airlines especially LCCs will jump on the routes they vacate.
Lufthansa will vacate less profitable routes which they can't make money on but which LCCs or airlines with smaller efficient planes will operate.
The routes which don't get picked up will have to be incentivised through a PSO which all carriers will compete for and if an LCC or an ATR42/72 operator picks up those routes and gets paid for it then it will still cost much less than 10BN in total.
LCCs will abandon some of their less profitable commercial routes to pick up what Lufthansa dropped and if the routes which the LCCs end don't continue to exist then were they really beneficial routes to begin with so are no loss.

Wich LCC or better said your beloved one is paying a solid salary ( by contract ) in Europe ??? No one , period !
Without any ( illegal ) subsidy FR wouldn`t exist at all ?!
LH is much more important to exist in Europe than a tiny airline wich more or less gain success of subsidies !
I fly LH for some good reasons but also mind FR like the plague because I`m a person with some health mentality. Why fly some ( mostly young ) alcoholics around Europe on tax payers cost ?
 
Kilopond
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Re: Lufthansa: 10B EUR bailout - Update

Wed May 20, 2020 11:04 pm

Waterbomber2 wrote:
[...]While there at it, can Germany also send some money to my account? I was a good boy, I promise.


In the Federal Republic of Germany "good boy“ translates into "dumb sheeple“.

If you are a freelance prostitute (male/female/diverse) you are entitled to either € 9k flat as a one-time cash payout or free housing, heating and healthcare (whatever that costs) plus € 424 free cash per month. Choose the bailout plan that suites you best!.

Now, the FRG rescue plans for brothel owners or islamistic agitators are somewhat too complicated and too much off-topic for this thread.
 
Blerg
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 5:01 am

Terrier79 wrote:
Noshow wrote:
The german government was pretty straightforward with it's requirements.Take it or leave it LH.

Ah, you were in the room while they negotiated? Interesting.

Fact is: There has been zero official announcements more than that there are negotiations ongoing. Everything else is just rumors, indiscretions, wishful thinking but definitely not fact. Let’s wait for an official statement.


No but there have been statements issued by various government and airline officials. I think those are pretty credible and reliable.
 
Blerg
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 5:08 am

There is something I don't understand, if the government is getting 25% of the airline, whose share will they be taking over? Or will they create new shares to make room for the German government?
 
oschkosch
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 6:46 am

LH has officially confirmed that the deal is nearly signed. It is for 20% plus a convertible bond equivalent to an additional 5% plus one share of the company’s increased capital.


Deutsche Lufthansa AG said it’s close to a multibillion euro bailout deal that would see the state become its biggest shareholder after the coronavirus punctured a decades-long boom in air travel. Lufthansa confirmed in a statement it’s in advanced talks with Germany’s WSF Economic Stabilization Fund for aid of as much as 9 billion euros ($9.9 billion). The package would include a 3 billion euro loan, a so-called silent participation and the WSF obtaining a 20% stake through a capital issuance, Lufthansa said.

The government would also receive a convertible bond equivalent to an additional 5% plus one share of the company’s increased capital. Under German law, a 25% plus one share stake would enable the state to block motions at annual general meetings, giving it a veto over hostile takeover attempts. “A decision can be expected shortly,” Merkel said late Wednesday in Berlin, adding that “intensive talks” were ongoing with the company and the European Commission, which would need to approve a deal. She declined to go into details, saying: “I would give the advice: wait for the talks to end.”

Lufthansa also said two seats on its supervisory board are to be filled in agreement with the German government. It didn’t say whether these would be political or independent figures, a matter under discussion in negotiations.


Lufthansa would issue the additional capital to the government for the nominal price of 2.56 euros, a steep discount that would allow the state to profit from any upside to the company’s share price.


https://finance.yahoo.com/news/german-c ... 54707.html
:stirthepot: :airplane: "This airplane is designed by clowns, who in turn are supervised by monkeys" :airplane: :stirthepot:
 
T4thH
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 7:29 am

And the complete official ad hoc release by LH for the shareholders., see below the English version.
A part is already in the post above.

English:
https://investor-relations.lufthansagroup.com/en/news/ad-hoc-releases/investor-relations-ad-hoc-releases/date/2020/05/21/deutsche-lufthansa-ag-confirms-advanced-talks-with-the-economic-stabilization-fund-on-the-concrete-design-of-a-stabilization-package.html
21.05.2020 Ad-hoc releases
Deutsche Lufthansa AG confirms advanced talks with the Economic Stabilization Fund on the concrete design of a stabilization package
Deutsche Lufthansa AG confirms that management is currently in advanced discussions with representatives of the Economic Stabilization Fund (WSF) of the Federal Republic of Germany on the concrete design of a stabilization package.

The concept, which has not yet been finalized, provides for stabilization measures in the amount of up to EUR 9 billion, of which EUR 3 billion is in the form of a KfW loan. In addition, the WSF is to provide a silent participation. By way of a capital increase at the nominal value per share, potentially reduced by a capital cut, excluding the subscription rights of existing shareholders with a corresponding dilution effect, the WSF is also to obtain a stake in shares of Deutsche Lufthansa AG amounting to 20% of the increased share capital. In addition, a convertible bond is to be agreed with the WSF, which can be exchanged for a further 5% plus one share also at the nominal value in the event of a public takeover offer by a third party. The convertible bond may be freely sold at any time without this restriction. The WSF intends to exercise the voting rights associated with the shares as a whole only in exceptional cases such as protection against a takeover.

An Extraordinary General Meeting is to decide on the capital increases. The granting of the silent participation and the granting of the loan are subject to the feasibility of the capital increase.

The expected conditions relate in particular to the waiver of future dividend payments and restrictions on management remuneration. In addition, two seats on the Supervisory Board are to be filled in agreement with the Federal Government.

Deutsche Lufthansa AG is continuing its talks with the WSF with the aim of reaching a conclusion promptly in order to secure the company's solvency in the long term. The stabilization package requires the approval of the WSF Committee as well as the Company’s Executive Board and Supervisory Board. It is also subject to approval by the European Commission.
 
Waterbomber2
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 9:05 am

The 3 Billion loan is ok and a reasonable measure.

But the capital increase is really excessive for an airline planning to restart activities as soon as next month.
I hope that the European Commission orders them to divest Brussels Airlines and imposes a ban on take-overs of other airlines for at least 5 years.
 
fraT
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 10:26 am

Waterbomber2 wrote:
The 3 Billion loan is ok and a reasonable measure.

But the capital increase is really excessive for an airline planning to restart activities as soon as next month.
I hope that the European Commission orders them to divest Brussels Airlines and imposes a ban on take-overs of other airlines for at least 5 years.


Why should they...?
 
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Terrier79
Posts: 76
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 10:50 am

Waterbomber2 wrote:
The 3 Billion loan is ok and a reasonable measure.

But the capital increase is really excessive for an airline planning to restart activities as soon as next month.
I hope that the European Commission orders them to divest Brussels Airlines and imposes a ban on take-overs of other airlines for at least 5 years.

If ordering them to divest Brussels, the EU would do them a big favor. I don’t understand Lufthansa’s love for this airline.
But as my fellow A.netter already wrote: Why should they?
 
Noshow
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 11:16 am

It is almost impossible to restructure smaller national airlines as an outside investor. You hurt national pride whenever you touch anything. This is why I don't get why they acquired Brussels and Austrian? You can even see with AF und KLM how difficult this is. Keep away from small flag carriers. There is no way to win. They must find national main investors if there are any.
 
sabenapilot
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 11:44 am

It has been reported Belgium is the 7th biggest market for Lufthansa, well ahead of many major global economies even.
I bet a big chunk of that is thanks to the fact they own the home carrier who's actively pushing Belgians onto Lufthansa's intercontinental flights to FRA, MUC or ZRH over letting them get on the train to AMS or CDG or the BA flights to LHR...
Add the fact Brussels gives Lufthansa a portfolio of truely unique routes in Africa which it also offers to its A++ joint venture partners UA and AC (leading to no less than 5 daily transatlantic flights by these 2 carriers) and it is obvious why they absolutely want to hold on to them, more so than to Austrian even it seems to me.
Brussels Airlines home market is a cash cow for Lufthansa and the airline a strategic pain in the back for AF-KLM as well as BA.
Given they have a much lower cost basis than Lufthansa proper, they'd actually better move selected African flights from FRA to BRU to strengthen the most western hub within their group and consolidate furher: this would be very profitable from a Group's perspective even, although if it would be a loss for Germany, hence it has never happened.
Contrary to IAG, the Lufthansa Group is not country neutral in its choices where to operate network flights from!
 
RvA
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 12:08 pm

sabenapilot wrote:
the Lufthansa Group is not country neutral in its choices where to operate network flights from!


I think you’ll find both IAG and LHG make their decisions based on what will make them the most money. It isn’t as simple as just moving some Africa destinations over to Brussels. If that made them more money, I suspect they’d have done so. Unless you have information to hand that shows the route analysis breakdowns for both hubs that shows different?
 
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Executor
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 12:16 pm

Noshow wrote:
It is almost impossible to restructure smaller national airlines as an outside investor. You hurt national pride whenever you touch anything. This is why I don't get why they acquired Brussels and Austrian? You can even see with AF und KLM how difficult this is. Keep away from small flag carriers. There is no way to win. They must find national main investors if there are any.


Swiss could be pointed as a counter-argument. If I recall correctly, LX has represented a big part of the group's EBIT over the last few years. Much bigger than its relative fleet size.
 
Noshow
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 12:24 pm

Even there LH had to give formal guarantees to develop Zürich at the same pace as Munich and Frankfurt. For any violation LH would need to handover all it's shares in Swiss to the Swiss Government!
 
leghorn
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 12:27 pm

Lufthansa was an industrial relations nightmare before this. It will be strikes all the way going forward now that the Government is the largest shareholder but Mutti will be retired in 2021 so she won't care.
 
fraT
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 12:53 pm

leghorn wrote:
Lufthansa was an industrial relations nightmare before this. It will be strikes all the way going forward now that the Government is the largest shareholder but Mutti will be retired in 2021 so she won't care.


Care to elaborate the reasons for this?
Some unions have already offered steep wage cuts to help avoid an insolvency.
 
Noshow
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 12:58 pm

All the past years we had strikes all over with a private independent Lufthansa. Maybe this is part of their problem? Unwillingness to change? Now with the public behind it and the pressure to pay back those loans the situation can only improve. The government will not oppose restructuring as they want their (our) money back.
Last edited by Noshow on Thu May 21, 2020 1:00 pm, edited 1 time in total.
 
leghorn
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 1:00 pm

Because it is now a company run which is now controlled by an entity that will do anything to avoid unrest and the company once funded by Government will not be in danger of bankruptcy so Unions can play hardball again. It will be Alitalia all over again. If they don't start kicking up by Christmas I'll be surprised.
It won't be just pay that will be the issue. Non-monetary terms and conditions will be the field of battle.
 
Blerg
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 1:01 pm

Criticism is mounting regarding this deal, regardless of what they say I doubt it will change anything.

https://www.airliners.de/schlechter-dea ... aket/55521
 
leghorn
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 1:02 pm

Noshow wrote:
All the past years we had strikes all over with a private independent Lufthansa. Maybe this is part of their problem? Unwillingness to change? Now with the public behind it and the pressure to pay back those loans the situation can only improve. The government will not oppose restructuring as they want their (our) money back.

imagine another poster posted that and then read it back to yourself.
 
Noshow
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 1:04 pm

Lufthansa's leadership opted and actually asked for this way to go. They wanted state aid. (However as a full freebie) They could have gone a different route if the government is feared to block their actions. Just face the full hardships and restructure yourself on your own. Guess why didn't they chose to do this?
 
leghorn
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 1:09 pm

Governments don't sell once they take a shareholding. It is politically unpalatable.
Ireland could have sold its shares it the Irish banks in 2018 when it was advised by experts to do so but politically they felt it was better to avoid it despite being able to recover billions of euro.
Now the shares have collapsed in value and their is acceptance they'll never make back the taxpayer money invested.
Here is an example of how it works: https://www.businesspost.ie/ireland/don ... w-9496769b

Politicians are not cold hard business people. They can squander or under-utilize billions without being brought to answer for their actions.
 
leghorn
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 1:11 pm

Blerg wrote:
Criticism is mounting regarding this deal, regardless of what they say I doubt it will change anything.

https://www.airliners.de/schlechter-dea ... aket/55521


It is a bad deal but I was fairly sure that it would happen - after all, it is only taxpayer's money.
 
fraT
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 1:17 pm

Blerg wrote:
Criticism is mounting regarding this deal, regardless of what they say I doubt it will change anything.

https://www.airliners.de/schlechter-dea ... aket/55521


Criticism is coming from the opposition parties in politics which is happening with every decision the government takes. And as you can read in the link you provided, one party is complaining about too much influence from the government and the other one about too less influence. Typical political games.
 
Waterbomber2
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Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 4:02 pm

fraT wrote:
Blerg wrote:
Criticism is mounting regarding this deal, regardless of what they say I doubt it will change anything.

https://www.airliners.de/schlechter-dea ... aket/55521


Criticism is coming from the opposition parties in politics which is happening with every decision the government takes. And as you can read in the link you provided, one party is complaining about too much influence from the government and the other one about too less influence. Typical political games.



I'll say it again: I'll believe it when I see it.

The capital injection part of 6 Billions, it looks good on paper, but it's a nightmare for everyone.
It's a nightmare for the EU competition authorities that play puppet for the French and German governments, it's a nightmare politically for the German government, it looks like it's a nightmare for LH management (god knows why, they should be kissing Mutti top to bottom if they get this), it's a nightmare for competitors, it's a nightmare for the taxpayer (every German would be contributing 80 EUR towards this capital injection), it's a nightmare for shareholders who will be diluted at a very low share price.

It just doesn't make sense to do this, I don't see this happening. Remember that I said that about things like the Boeing-Embraer deal.
The 3 Billion loan will stick and will perhaps be jacked up towards 5-6-7 Billions.
That's what I see happening and makes the most sense.
 
GLANKG
Posts: 107
Joined: Fri Feb 02, 2018 9:19 am

Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 4:56 pm

leghorn wrote:
Governments don't sell once they take a shareholding. It is politically unpalatable.
Ireland could have sold its shares it the Irish banks in 2018 when it was advised by experts to do so but politically they felt it was better to avoid it despite being able to recover billions of euro.
Now the shares have collapsed in value and their is acceptance they'll never make back the taxpayer money invested.
Here is an example of how it works: https://www.businesspost.ie/ireland/don ... w-9496769b

Politicians are not cold hard business people. They can squander or under-utilize billions without being brought to answer for their actions.

It's irrelevant Ireland hasn't sold bank stakes. Norway pretty much sold all its shares in SAS. Even in the bank bailout you mentioned you can find UK sold all its stakes in Lloyds and 10% of RBS. They might lose money true, you never know, but when not whether they sell back state stakes depends on the market and ruling party, no tory pm would tolerate state owned bank for one day more than necessary, CDU isnae too far from that.
 
LJ
Posts: 5336
Joined: Wed Nov 17, 1999 8:28 pm

Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 5:03 pm

leghorn wrote:
Governments don't sell once they take a shareholding. It is politically unpalatable..


Not true, The Dutch government is selling its shares in ABN AMRO and will start up selling its shares in another bank. Only when it purchased its shares fo strategic reasons (AF/KL) it holds the shares, but not when it received support. Moreover, LH provides a very good incentive for the German government to sell it stakes later on (AFAIK the expected issue price is EUR 2.56).
 
leghorn
Posts: 1297
Joined: Sun Jan 22, 2017 9:13 am

Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 6:11 pm

last time I looked SPD were in Government. The greens won't be enough to form a government with CDU so Germany will have some sort of rainbow government with socialists in it. They will never find the right time to sell it.
 
fraT
Posts: 1174
Joined: Wed Oct 01, 2003 4:32 am

Re: Lufthansa: 10B EUR bailout - Update

Thu May 21, 2020 8:29 pm

leghorn wrote:
last time I looked SPD were in Government. The greens won't be enough to form a government with CDU so Germany will have some sort of rainbow government with socialists in it. They will never find the right time to sell it.


Hmm, currently all demoscopic firms have a CDU/Green majority of more than 55%. So I don't know how you come to your conclusion. Right now we are even close to a CDU/FDP majority which companies like LH would love to have.

Elections are 17 months away and of course a lot can happen in this time but I wouldn't bet any money that the social democrats are part o the next federal government.

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