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Blerg
Posts: 3996
Joined: Tue Jan 09, 2018 11:42 am

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 6:27 am

This slot requirement is a joke. They should have forced them to divest from either OS or SN. After all, didn't they force LO and BT to downsize when they got state aid? Basically Lufthansa is getting its 9 billion with no strings attached?
 
RvA
Posts: 375
Joined: Tue Sep 15, 2015 12:37 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 8:12 am

https://newsroom.lufthansagroup.com/Eng ... b8e2ae3b66

Needs more approval but I guess that’ll happen this time around. Not sure what the commotion is about looking at other airlines receiving support too. Thinking about the US airlines, AFKL, IB, AZ etc.
 
RvA
Posts: 375
Joined: Tue Sep 15, 2015 12:37 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 8:13 am

Blerg wrote:
This slot requirement is a joke. They should have forced them to divest from either OS or SN. After all, didn't they force LO and BT to downsize when they got state aid? Basically Lufthansa is getting its 9 billion with no strings attached?


It’s not free money.
 
Blerg
Posts: 3996
Joined: Tue Jan 09, 2018 11:42 am

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 8:15 am

RvA wrote:
Blerg wrote:
This slot requirement is a joke. They should have forced them to divest from either OS or SN. After all, didn't they force LO and BT to downsize when they got state aid? Basically Lufthansa is getting its 9 billion with no strings attached?


It’s not free money.


Oh yeah, I'm sorry, I forgot about the slot and fleet requirements and the German government getting shares from which they will make serious money once the situation returns to normal.
 
RvA
Posts: 375
Joined: Tue Sep 15, 2015 12:37 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 8:33 am

Blerg wrote:
RvA wrote:
Blerg wrote:
This slot requirement is a joke. They should have forced them to divest from either OS or SN. After all, didn't they force LO and BT to downsize when they got state aid? Basically Lufthansa is getting its 9 billion with no strings attached?


It’s not free money.


Oh yeah, I'm sorry, I forgot about the slot and fleet requirements and the German government getting shares from which they will make serious money once the situation returns to normal.


Loans and shares are free money?
 
Eikie
Posts: 110
Joined: Tue Nov 06, 2018 1:15 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 8:38 am

RvA wrote:
https://newsroom.lufthansagroup.com/English/Newsroom/agreement-on-lufthansa-s-stabilization-package/s/1d7a23a2-8f62-42d4-93df-7ab8e2ae3b66

Needs more approval but I guess that’ll happen this time around. Not sure what the commotion is about looking at other airlines receiving support too. Thinking about the US airlines, AFKL, IB, AZ etc.

Big difference is at KLM/AF the government isn't taking/buying a share, but only gives loans.

That might be what the EU sees as the "problem".
 
Blerg
Posts: 3996
Joined: Tue Jan 09, 2018 11:42 am

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 8:43 am

RvA wrote:
Blerg wrote:
RvA wrote:

It’s not free money.


Oh yeah, I'm sorry, I forgot about the slot and fleet requirements and the German government getting shares from which they will make serious money once the situation returns to normal.


Loans and shares are free money?


Loans are not, shares are. This whole situation regarding Lufthansa only shows that there are double standards in the EU, one for Germoney and then for the rest of us mere mortals.
 
GZM1
Posts: 73
Joined: Thu Jun 20, 2019 2:21 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 8:49 am

Sorry, how much did those 14 new A380s cost to buy? How much did the unnecessary new livery? (plus the cost of applying it to every airplane in the fleet). Here’s your 10 billion German taxpayers, for the new much needed accessories of Lufthansa. Foot the bill now!
It’s all Greek to me! Aeroplane Basic Category Cycle Dynamic Economics Ecstasy Fantasy Galaxy Geometry Harmony History Horizon Idea Logic Magnetism Music Mystery Nautical Orchestra Organism Phenomenon Political Problem Symphony Technology Telephone Zone
 
mxaxai
Posts: 1812
Joined: Sat Jun 18, 2016 7:29 am

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 8:52 am

Blerg wrote:
This slot requirement is a joke. They should have forced them to divest from either OS or SN. After all, didn't they force LO and BT to downsize when they got state aid? Basically Lufthansa is getting its 9 billion with no strings attached?

False. LO & BT downsized as a business decision to return to profitability. The EU had no such requirement (except some slot divestment).
 
TUGMASTER
Posts: 1187
Joined: Wed Jul 07, 2004 8:56 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 9:03 am

Written somewhere up thread..
“”The loan will have to be paid back supposedly, there’s no such stipulation about the billions payed for a share in the company.””

And how long in reality is that going to take..?
30+ years...? If not more....???
 
DUSZRH
Posts: 218
Joined: Thu Jan 05, 2017 12:17 am

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 9:25 am

Eikie wrote:
RvA wrote:
https://newsroom.lufthansagroup.com/English/Newsroom/agreement-on-lufthansa-s-stabilization-package/s/1d7a23a2-8f62-42d4-93df-7ab8e2ae3b66

Needs more approval but I guess that’ll happen this time around. Not sure what the commotion is about looking at other airlines receiving support too. Thinking about the US airlines, AFKL, IB, AZ etc.

Big difference is at KLM/AF the government isn't taking/buying a share, but only gives loans.

That might be what the EU sees as the "problem".


Big difference is that FR/NL already own a sizeable share.
 
Blerg
Posts: 3996
Joined: Tue Jan 09, 2018 11:42 am

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 9:38 am

mxaxai wrote:
Blerg wrote:
This slot requirement is a joke. They should have forced them to divest from either OS or SN. After all, didn't they force LO and BT to downsize when they got state aid? Basically Lufthansa is getting its 9 billion with no strings attached?

False. LO & BT downsized as a business decision to return to profitability. The EU had no such requirement (except some slot divestment).


From what I remember both had to make network cuts, same with RO which just got state aid. The EU requires airlines to downsize once they get money from their state.
 
stylo777
Posts: 2808
Joined: Mon Feb 13, 2006 7:32 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 11:43 am

RvA wrote:
https://newsroom.lufthansagroup.com/English/Newsroom/agreement-on-lufthansa-s-stabilization-package/s/1d7a23a2-8f62-42d4-93df-7ab8e2ae3b66

from that media post by LH Newsroom it says:
(...)Lufthansa will therefore be obliged to transfer to one competitor each at the Frankfurt and Munich airports up to 24 take-off and landing rights (slots), i.e. three take-off and three landing rights per aircraft and day, for the stationing of up to four aircraft. For one and a half years, this option is only available to new competitors at the Frankfurt and Munich airports. If no new competitor makes use of this option, it will be extended to existing competitors at the respective airports.(...)

The LCC options:
Considering FR, U2 are already in FRA and W6 just recently left, who is actually left on the market with great interest and the necessary amount of money to set up base with four aircraft and at a very restricted airport when it comes to nightcurfew? Vueling (VY) tried a few years ago, but gave up. Level Europe (VK) very unlikely in current market environment. Norwegian (DY) - well, they should survive first.
What about Transavia (HV)?

Situation in MUC is a bit different and more opportunities are available I guess. FR axed their routes though just recently.

Other airline options:
I see hardly any other airline currently having the money for such an investment. Sure, FRA or MUC aren't LHR, but it's still very resource-intensive and particularly for the case of FRA hardly any big catchment area supporting such operations (besides businesses like banking, service, etc. of course).
 
RvA
Posts: 375
Joined: Tue Sep 15, 2015 12:37 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 1:41 pm

GZM1 wrote:
Sorry, how much did those 14 new A380s cost to buy? How much did the unnecessary new livery? (plus the cost of applying it to every airplane in the fleet). Here’s your 10 billion German taxpayers, for the new much needed accessories of Lufthansa. Foot the bill now!


Lol. Ignorance is bliss.
 
MIflyer12
Posts: 7790
Joined: Mon Feb 18, 2013 11:58 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 1:57 pm

TUGMASTER wrote:
Written somewhere up thread..
“”The loan will have to be paid back supposedly, there’s no such stipulation about the billions payed for a share in the company.””

And how long in reality is that going to take..?
30+ years...? If not more....???


Separately, Lufthansa will receive a 3 billion euro loan from state-backed bank KfW and private banks with a term of three years.

https://www.cnbc.com/2020/05/25/lufthan ... ckage.html

The State will determine when it wants to sell its equity shares, as a private placement or on the open market -- the same way it works with VW, Groupe Renault, ANB AMRO, Airbus, AFKL...
 
artflyer
Posts: 142
Joined: Thu Jun 06, 2019 4:08 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 2:19 pm

mxaxai wrote:
Blerg wrote:
This slot requirement is a joke. They should have forced them to divest from either OS or SN. After all, didn't they force LO and BT to downsize when they got state aid? Basically Lufthansa is getting its 9 billion with no strings attached?

False. LO & BT downsized as a business decision to return to profitability. The EU had no such requirement (except some slot divestment).


Nope. LO was forced to downsize by the EC: 19 proftable routes were closed and 5 profitable routes were downsized as a compensatory measure. This coresponded to 13.5 to 16.5% reduction in ASK. This on top of closing and reducing unprofitable routes.

In addition LO had to release slots at some airports, including FRA and MUC. I don't recall how many, but I can image that was comparable to what LH would be requested to do now, as prior to that LO was flying to these airports also from Polish regional airports and that immediately ceases/was replaced by LH flights.

Lufthansa, apart from BA, was the most active, when voicing concern at that time. The ultimate amount of state aid that LO receiced in 2012 was 527 mln pln, which is 120 mln euro.
 
sabby
Posts: 438
Joined: Fri Jun 01, 2018 5:11 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 3:00 pm

AMALH747430 wrote:
The EU may be playing a dangerous game here. Germany is the EU's largest economy. While the possibility of it happening is VERY VERY remote, if Germany gets fed up (as the UK did) and packs their bags, the EU will be in a world of hurt. It also looks like the EU is playing against the labor groups, which isn't smart in Europe. EU politicians claim to be on the side of the working people but their tactics will make airlines that pay less and foreign airlines stronger at the expense of a well-paying legacy carrier that serves its market quite well and allows Europe to punch above its weight on the world transportation scene. I'm usually not for government aid but this crisis is unprecedented. It also seems as if the EU competition authorities are picking and choosing here. Germany is being told that LH has basically has to weaken itself to receive aid but France can outright create a transportation monopoly by making AF completely stop competing with SNCF/TGV on certain routes. That strikes me as very anti-consumer illegal collusion. Where is the outrage from Brussels there? I guess if the environmentalists are happy, then they just turn a blind eye? I hope Germany and LH fight Brussels on this and use any tactics necessary to put these so-called competition authorities in their place.


Because Germany is the biggest benefactor from the Eurozone. If they were to leave EU like UK, Eurozone would collapse and the export of German goods would tank and many low cost countries like Poland, Romania, Spain etc. would take advantage. being in EU benefits all the countries in the short and long run and obviously there are sacrifices from all the countries.

It is a farce that LH group were allowed to be near monopoly in so many markets through acquiring so many airlines ( and not just LH group, IAG as well). AF-KLM are not there yet as they haven't acquired significant airlines outside of their home markets, they have only 2 mega hubs where there are fair competition and AF-KLM work more like partnership and balanced from both the Governments instead of a private single entity.
 
GZM1
Posts: 73
Joined: Thu Jun 20, 2019 2:21 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 3:12 pm

RvA wrote:
GZM1 wrote:
Sorry, how much did those 14 new A380s cost to buy? How much did the unnecessary new livery? (plus the cost of applying it to every airplane in the fleet). Here’s your 10 billion German taxpayers, for the new much needed accessories of Lufthansa. Foot the bill now!


Lol. Ignorance is bliss.

The world is crumbling and Lufty is doing make-up.
It’s all Greek to me! Aeroplane Basic Category Cycle Dynamic Economics Ecstasy Fantasy Galaxy Geometry Harmony History Horizon Idea Logic Magnetism Music Mystery Nautical Orchestra Organism Phenomenon Political Problem Symphony Technology Telephone Zone
 
Waterbomber2
Posts: 1208
Joined: Mon Feb 04, 2019 3:44 am

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 3:23 pm

stylo777 wrote:
RvA wrote:
https://newsroom.lufthansagroup.com/English/Newsroom/agreement-on-lufthansa-s-stabilization-package/s/1d7a23a2-8f62-42d4-93df-7ab8e2ae3b66

from that media post by LH Newsroom it says:
(...)Lufthansa will therefore be obliged to transfer to one competitor each at the Frankfurt and Munich airports up to 24 take-off and landing rights (slots), i.e. three take-off and three landing rights per aircraft and day, for the stationing of up to four aircraft. For one and a half years, this option is only available to new competitors at the Frankfurt and Munich airports. If no new competitor makes use of this option, it will be extended to existing competitors at the respective airports.(...)

The LCC options:
Considering FR, U2 are already in FRA and W6 just recently left, who is actually left on the market with great interest and the necessary amount of money to set up base with four aircraft and at a very restricted airport when it comes to nightcurfew? Vueling (VY) tried a few years ago, but gave up. Level Europe (VK) very unlikely in current market environment. Norwegian (DY) - well, they should survive first.
What about Transavia (HV)?

Situation in MUC is a bit different and more opportunities are available I guess. FR axed their routes though just recently.

Other airline options:
I see hardly any other airline currently having the money for such an investment. Sure, FRA or MUC aren't LHR, but it's still very resource-intensive and particularly for the case of FRA hardly any big catchment area supporting such operations (besides businesses like banking, service, etc. of course).


Yes, they have made it very hard for the slots to be taken away.
De-facto no EU strings attached.


What LH and other airlines receiving bailouts are forgetting in this process is that they are actually destroying the EU competition office.
If anything, that office has protected their interests by culling smaller airlines, nipping start-ups in the bud, and constantly nagging at LCC's.
After this, anything coming from this office is most likely to have to go through a lengthy court process to be confirmed or denied.

As recently as February, this EU office acted evasively, repeatedly delaying and rejecting a request from the Sardinian Region to formalise new continuita territoriale subsidies.
The EU was looking at every single letter in the construction of these subsidies.
After this LH bailout was cleared within days and based on rudimental agreements on huge sums of money and very dubious constructions, you can bet that everybody is going to do what they want and refer the EU competition office to the court, using the LH bailout as a prime example of a biased two-speed EU competition policy.



TUGMASTER wrote:
Written somewhere up thread..
“”The loan will have to be paid back supposedly, there’s no such stipulation about the billions payed for a share in the company.””

And how long in reality is that going to take..?
30+ years...? If not more....???


RvA wrote:
Blerg wrote:
RvA wrote:

It’s not free money.


Oh yeah, I'm sorry, I forgot about the slot and fleet requirements and the German government getting shares from which they will make serious money once the situation returns to normal.


Loans and shares are free money?



LH made the Belgian government investment company convert a 100 Million start-up loan of SN into a non-voting interest that pays dividends if the airline makes money.
The airline didn't earn money after that so that loan was never repaid and basically vanished.

If we go by that record, LH is going to try to make this bailout disappear, so they can pay out bonusses and dividends, instead of thanking and repaying the taxpayer.

sabenapilot wrote:
Jetty wrote:
That’s not a valid comparison. The numbers are wrong as LH will get way more than 6BN. And you have to either compare AF/KL with the LH-group or AF and KL with the separate airlines of LH-group. LH is still talking with the Belgian and Austrian governments and already got a huge amount of money from the Swiss government.


That's a valid point indeed!
In Belgium we're talking about 290M, in Austria it's 767M if I am correct? Switzerland already agreed to 1.1BN
Ad all that to the loan Lufthansa discussed with the WSF in Germany of the 5.7BN: a total of 7.9BN in loans.
AF + KL is at 7BN (from France) + 2BN to 4BN (from The Netherlands), all in loans.

Jetty wrote:
Thus in every comparison LH gets more money while they were the airline aggressively expanding over the last decade, not AF/KL.


The conclusion that they get more money is not correct IMHO (see above)

The fact they have expanded over the last decade can not automatically be seen as something bad: I thought that was the essence of doing business successfully? Is Ryanair or Easyjet a bad business, just because they expanded agressively too?

I have the impression the EC is (mis)using the current situation to downsize a company which became just too successful, albeit by using market mechanisms only.


Your theory is rubbish and I'll explain why.

Ryanair and Lufthansa had the same amount of liquidity at the start of this crisis, about 4 Billions each.
The difference between these companies is that LH has 4 to 5 times the revenues of Ryanair: 36 Billion versus 8 Billion.
So when the revenues stop flowing in, Ryanair has 6 months of revenues worth of cash in hand, while LH has only 45 days of revenues in cash.

That's why Ryanair can survive withou a bailout and LH can't.
If LH had followed the same conservative and sound financial management that Ryanair has with their balance sheet, they would have had about 18 Billions in cash and wouldn't need to beg for a bailout.

LH has clearly overstretched its finances by overexpanding while at the same time distributing its earnings as bonusses and dividends.
The German taxpayers are now footing the bill for that overexpansion.

Remember those stress-tests on the banks in the wake of the GFC?
LH is like a bank that loaned all the savings of their customers out to maximise market share in loans. In good times, everything is fine and you can run more conservative competitors out of business, but in bad times people stop paying their loans and then you find yourself unable to give the savers their money back.

In other words, if you know that the taxpayer is going to save you at the next financial catastrophe, you can take more risk than your competitors and make more money.
This 10 Billion Euro bailout is nothing but a retroactive loan from the taxpayer to pay for LH's reckless expansion and balance sheet management.

So Blerg is right, if we follow the rules of the game, AF-KLM and Lufthansa should go cash-flow insolvent and sort it out on their own.
How would it otherwise be fair towards all the competitors that are in bankruptcy or the conservative competitors who are burning their own well-managed cash after competing against them?
 
Westerwaelder
Posts: 224
Joined: Fri Apr 03, 2020 12:27 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat May 30, 2020 3:30 pm

sabby wrote:
AMALH747430 wrote:
The EU may be playing a dangerous game here. Germany is the EU's largest economy. While the possibility of it happening is VERY VERY remote, if Germany gets fed up (as the UK did) and packs their bags, the EU will be in a world of hurt. It also looks like the EU is playing against the labor groups, which isn't smart in Europe. EU politicians claim to be on the side of the working people but their tactics will make airlines that pay less and foreign airlines stronger at the expense of a well-paying legacy carrier that serves its market quite well and allows Europe to punch above its weight on the world transportation scene. I'm usually not for government aid but this crisis is unprecedented. It also seems as if the EU competition authorities are picking and choosing here. Germany is being told that LH has basically has to weaken itself to receive aid but France can outright create a transportation monopoly by making AF completely stop competing with SNCF/TGV on certain routes. That strikes me as very anti-consumer illegal collusion. Where is the outrage from Brussels there? I guess if the environmentalists are happy, then they just turn a blind eye? I hope Germany and LH fight Brussels on this and use any tactics necessary to put these so-called competition authorities in their place.


Because Germany is the biggest benefactor from the Eurozone. If they were to leave EU like UK, Eurozone would collapse and the export of German goods would tank and many low cost countries like Poland, Romania, Spain etc. would take advantage. being in EU benefits all the countries in the short and long run and obviously there are sacrifices from all the countries.

It is a farce that LH group were allowed to be near monopoly in so many markets through acquiring so many airlines ( and not just LH group, IAG as well). AF-KLM are not there yet as they haven't acquired significant airlines outside of their home markets, they have only 2 mega hubs where there are fair competition and AF-KLM work more like partnership and balanced from both the Governments instead of a private single entity.


That is essentially nonsense. IAG's main airline operates from London, one of the most competitive markets in the world. BA's marketshare from their main airport is well below that of AF in Paris and KLM in Amsterdam. The only airline really they operate outside their home market is EI. To say there is more competition in AMS and CDG/ORY than LHR or LGW, even MAD and BCN is simply nonsense.

The LH group aren't operating any airline outside of their home markets. Not a single one - well except for Air Dolomiti maybe.... They just happen to have four home markets compared to AF/KL's two.
 
YIMBY
Posts: 724
Joined: Tue Sep 20, 2016 4:32 pm

Re: Lufthansa: 10B EUR bailout - Update

Sun May 31, 2020 3:18 pm

RvA wrote:
https://newsroom.lufthansagroup.com/English/Newsroom/agreement-on-lufthansa-s-stabilization-package/s/1d7a23a2-8f62-42d4-93df-7ab8e2ae3b66

Needs more approval but I guess that’ll happen this time around. Not sure what the commotion is about looking at other airlines receiving support too. Thinking about the US airlines, AFKL, IB, AZ etc.


That is very small, completely symbolic concession, given that
- LH has already a huge amount of slots
- LH would not be able to use (profitably) all their slots within the next months/years
- I cannot imagine what airline could take the slots and start the base, given that
* it must be a new competitor (no previous flights to MUC/FRA, I think just not having a base there is not enough)
* it must be an EU carrier (UK may or may not do)
* airlines receiving any significant state aid are excluded (essentially all surviving airlines)
* minor airlines or startups may not have resources to start a base though planes and pilots are plentifully available
 
mxaxai
Posts: 1812
Joined: Sat Jun 18, 2016 7:29 am

Re: Lufthansa: 10B EUR bailout - Update

Mon Jun 01, 2020 2:40 pm

artflyer wrote:
Nope. LO was forced to downsize by the EC: 19 proftable routes were closed and 5 profitable routes were downsized as a compensatory measure. This coresponded to 13.5 to 16.5% reduction in ASK. This on top of closing and reducing unprofitable routes.

In addition LO had to release slots at some airports, including FRA and MUC. I don't recall how many, but I can image that was comparable to what LH would be requested to do now, as prior to that LO was flying to these airports also from Polish regional airports and that immediately ceases/was replaced by LH flights.

Lufthansa, apart from BA, was the most active, when voicing concern at that time. The ultimate amount of state aid that LO receiced in 2012 was 527 mln pln, which is 120 mln euro.

Alright, I did not read the LOT case with enough attention to detail. https://ec.europa.eu/commission/pressco ... /IP_14_883

LOT has prepared a credible restructuring plan that should make it a viable company in the near future. At the same time, it gives up some profitable routes and slots at several congested airports, which creates opportunities for its competitors and reduces the competition distortions brought about by the aid

As a compensatory measure LOT proposes to close 19 connections and to reduce
frequency on 5 connections. The proposed measure corresponds to a reduction of
capacity by [13.5-16.5]% in terms of ASK as compared to the pre-restructuring period
November 2011 – October 2012. According to LOT none of the above connections was
loss-making prior to restructuring, as required by point 40 of the Community guidelines
on State aid for rescuing and restructuring firms in difficulty19 (“the Guidelines”).
...
The Commission received comments from seven interested parties: Ryanair, International
Airlines Group ("IAG"), two parties who wished not to disclose their identity [presumably LH, plus somebody with a strong interest in the polish charter market], the trade union "NSZZ Solidarność 80" of the PPL ("the trade union"), the PPL itself and the
business association "Employers of Poland".


I will point out, though, that LOT only chose to cut routes that were profitable on a variable-cost basis, without taking fixed costs into account. If they did, as you point out, primarily cut regional bases it is likely that each route on its own was profitable but the overall base was not. After all, almost all European legacy airlines have withdrawn from regional point-to-point routes. And in hindsight, focusing on the hub at WAW seems to have been a good decision.

There is a different situation, though. Primarily the timeframe, LH needed a decision within a few weeks whereas the EC could take their time with LOT, allowing multiple letters to be sent back and forth. The economic context is also different, since air travel was stable and growing in the 2010's whereas we are in a highly dynamic crisis right now. Asking LH to give up profitable routes right now is pointless since there are no currently profitable routes.

The EU itself acknowledged that the LH decision sets a precedent for similar future cases, not just in aviation but also other sectors (and I'm sure some officials would not mind if the decision got overturned by a court).
 
airbazar
Posts: 10119
Joined: Wed Sep 10, 2003 11:12 pm

Re: Lufthansa: 10B EUR bailout - Update

Mon Jun 01, 2020 2:51 pm

YIMBY wrote:
RvA wrote:
https://newsroom.lufthansagroup.com/English/Newsroom/agreement-on-lufthansa-s-stabilization-package/s/1d7a23a2-8f62-42d4-93df-7ab8e2ae3b66

Needs more approval but I guess that’ll happen this time around. Not sure what the commotion is about looking at other airlines receiving support too. Thinking about the US airlines, AFKL, IB, AZ etc.


That is very small, completely symbolic concession, given that
- LH has already a huge amount of slots
- LH would not be able to use (profitably) all their slots within the next months/years
- I cannot imagine what airline could take the slots and start the base, given that
* it must be a new competitor (no previous flights to MUC/FRA, I think just not having a base there is not enough)
* it must be an EU carrier (UK may or may not do)
* airlines receiving any significant state aid are excluded (essentially all surviving airlines)
* minor airlines or startups may not have resources to start a base though planes and pilots are plentifully available


Protectionism at its finest.
About the only airline that could qualify is Ryanair but I doubt they'd be interested in so few slots.
 
YIMBY
Posts: 724
Joined: Tue Sep 20, 2016 4:32 pm

Re: Lufthansa: 10B EUR bailout - Update

Mon Jun 01, 2020 3:28 pm

airbazar wrote:
YIMBY wrote:
RvA wrote:
https://newsroom.lufthansagroup.com/English/Newsroom/agreement-on-lufthansa-s-stabilization-package/s/1d7a23a2-8f62-42d4-93df-7ab8e2ae3b66

Needs more approval but I guess that’ll happen this time around. Not sure what the commotion is about looking at other airlines receiving support too. Thinking about the US airlines, AFKL, IB, AZ etc.


That is very small, completely symbolic concession, given that
- LH has already a huge amount of slots
- LH would not be able to use (profitably) all their slots within the next months/years
- I cannot imagine what airline could take the slots and start the base, given that
* it must be a new competitor (no previous flights to MUC/FRA, I think just not having a base there is not enough)
* it must be an EU carrier (UK may or may not do)
* airlines receiving any significant state aid are excluded (essentially all surviving airlines)
* minor airlines or startups may not have resources to start a base though planes and pilots are plentifully available


Protectionism at its finest.
About the only airline that could qualify is Ryanair but I doubt they'd be interested in so few slots.


Not even Ryanair as it is not a new competitor. It lists Frankfurt International and Munich currently as its destination in the web pages and apparently sells tickets there.
 
DUSZRH
Posts: 218
Joined: Thu Jan 05, 2017 12:17 am

Re: Lufthansa: 10B EUR bailout - Update

Mon Jun 01, 2020 8:20 pm

YIMBY wrote:
RvA wrote:
https://newsroom.lufthansagroup.com/English/Newsroom/agreement-on-lufthansa-s-stabilization-package/s/1d7a23a2-8f62-42d4-93df-7ab8e2ae3b66

Needs more approval but I guess that’ll happen this time around. Not sure what the commotion is about looking at other airlines receiving support too. Thinking about the US airlines, AFKL, IB, AZ etc.


That is very small, completely symbolic concession, given that
- LH has already a huge amount of slots
- LH would not be able to use (profitably) all their slots within the next months/years
- I cannot imagine what airline could take the slots and start the base, given that
* it must be a new competitor (no previous flights to MUC/FRA, I think just not having a base there is not enough)
* it must be an EU carrier (UK may or may not do)
* airlines receiving any significant state aid are excluded (essentially all surviving airlines)
* minor airlines or startups may not have resources to start a base though planes and pilots are plentifully available


Some corrections on my part:

-yes, LH has a bulk load of slots.
- I reckon it’s a long term measure. A new entrant has 18 months to apply. After that other competitors will be considered.

How that point (new competitor) is defined is to be seen. I reckon either new route or new base. If it’s the latter it would exclude FR and W6 in FRA.

It must be a EU carrier. No surprise here as the competition authority is concerned about some LH monopoly routes. (Large ones (1m+ passenger pa) are FRA-HAM,VIE,MUC (soon BER, U2 is leaving) and MUC-HAM,DUS,CGN)

Airlines receiving recapitalisation are excluded. So loans only are fine; equity like LH is not. It’s also the reason why LH is treated different to AF/KL.
 
DUSZRH
Posts: 218
Joined: Thu Jan 05, 2017 12:17 am

Re: Lufthansa: 10B EUR bailout - Update

Mon Jun 01, 2020 8:20 pm

YIMBY wrote:
RvA wrote:
https://newsroom.lufthansagroup.com/English/Newsroom/agreement-on-lufthansa-s-stabilization-package/s/1d7a23a2-8f62-42d4-93df-7ab8e2ae3b66

Needs more approval but I guess that’ll happen this time around. Not sure what the commotion is about looking at other airlines receiving support too. Thinking about the US airlines, AFKL, IB, AZ etc.


That is very small, completely symbolic concession, given that
- LH has already a huge amount of slots
- LH would not be able to use (profitably) all their slots within the next months/years
- I cannot imagine what airline could take the slots and start the base, given that
* it must be a new competitor (no previous flights to MUC/FRA, I think just not having a base there is not enough)
* it must be an EU carrier (UK may or may not do)
* airlines receiving any significant state aid are excluded (essentially all surviving airlines)
* minor airlines or startups may not have resources to start a base though planes and pilots are plentifully available


Some corrections on my part:

-yes, LH has a bulk load of slots.
- I reckon it’s a long term measure. A new entrant has 18 months to apply. After that other competitors will be considered.

How that point (new competitor) is defined is to be seen. I reckon either new route or new base. If it’s the latter it would exclude FR and W6 in FRA.

It must be a EU carrier. No surprise here as the competition authority is concerned about some LH monopoly routes. (Large ones (1m+ passenger pa) are FRA-HAM,VIE,MUC (soon BER, U2 is leaving) and MUC-HAM,DUS,CGN)

Airlines receiving recapitalisation are excluded. So loans only are fine; equity like LH is not. It’s also the reason why LH is treated different to AF/KL.
 
LJ
Posts: 5292
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Re: Lufthansa: 10B EUR bailout - Update

Tue Jun 02, 2020 3:14 pm

YIMBY wrote:
airbazar wrote:
YIMBY wrote:

That is very small, completely symbolic concession, given that
- LH has already a huge amount of slots
- LH would not be able to use (profitably) all their slots within the next months/years
- I cannot imagine what airline could take the slots and start the base, given that
* it must be a new competitor (no previous flights to MUC/FRA, I think just not having a base there is not enough)
* it must be an EU carrier (UK may or may not do)
* airlines receiving any significant state aid are excluded (essentially all surviving airlines)
* minor airlines or startups may not have resources to start a base though planes and pilots are plentifully available


Protectionism at its finest.
About the only airline that could qualify is Ryanair but I doubt they'd be interested in so few slots.


Not even Ryanair as it is not a new competitor. It lists Frankfurt International and Munich currently as its destination in the web pages and apparently sells tickets there.


Moreover, Ryanair received GBP 600mn from UK's Covid corporate financing facility, which the Germans will probably see as state aid.

https://www.theguardian.com/business/2020/may/18/ryanair-chief-michael-oleary-uk-mismanaging-coronavirus-crisis
https://simpleflying.com/ryanair-730-million-loan/
 
Waterbomber2
Posts: 1208
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Lufthansa 10B Bailout could still fall through

Wed Jun 17, 2020 3:23 pm

Greed has a face and a name, and it has shown itself.
It is now apparent who was pushing for the tough negotiations at Lufthansa:

BERLIN, June 17 (Reuters) - German flagship carrier Lufthansa said on Tuesday that the implementation of its bailout deal had not been secured and it might need to apply for creditor protection proceedings around the time of its extraordinary general meeting.

The statement came after German investor Heinz Hermann Thiele sharply criticised a 9 billion euro ($10.14 billion)bailout deal for carrier Lufthansa, saying he had raised his stake in the group to more than 15% and hoped alternative options could be explored.


https://www.reuters.com/article/healthc ... SS8N2DH07J


It is apparent that billionaire speculators are not thankful for taxpayer intervention.
I hope that the many supporters of the bailout see that they are advocating to support greedy, immoral, speculators.

In my opinion, LH shareholders should be allowed to lose everything and the company should be fully nationalized, through an insolvency procedure.
This is the only way to preserve the jobs and give the company a sustainable future.

Palihapitiya is right, who cares if the Billionaires get wiped out when Main Street people are getting wiped out.
Leaving Lufthansa in the hands of Billionaire speculators is not the right choice in a crisis like this.

https://www.youtube.com/watch?v=NvEWez59fbI

Here an explanation of why this Lufthansa investor is unhappy (equity dilution):

https://www.youtube.com/watch?v=NvEWez59fbI

It is also apparent now who was driving up the LH share price in the past weeks
 
Blerg
Posts: 3996
Joined: Tue Jan 09, 2018 11:42 am

Re: Lufthansa: 10B EUR bailout - Update

Fri Jun 19, 2020 6:26 am

So how much longer does LH have? Ok, they have large cash reserves but at the same time they are losing a million every hour. Also, the longer they wait the less they will have left from those €9 billion they are supposed to receive. Time is running out for them especially now when their competition is going back into business.
 
Noshow
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Joined: Wed Jun 15, 2016 3:20 pm

Re: Lufthansa: 10B EUR bailout - Update

Fri Jun 19, 2020 7:49 am

Next week is the shareholder meeting needed to greenlight their strategy. It feels like their new billionaire investor aims for chapter 11 instead of the government bailout package. With interest rates so low the costs of Lufty's retirement and pension scheme grew so much that this might be seen as a way to better start from scratch without those old obligations.
 
Kikko19
Posts: 679
Joined: Sat Apr 22, 2017 4:45 pm

Re: Lufthansa 10B Bailout could still fall through

Fri Jun 19, 2020 10:17 am

Waterbomber2 wrote:
Greed has a face and a name, and it has shown itself.
It is now apparent who was pushing for the tough negotiations at Lufthansa:

BERLIN, June 17 (Reuters) - German flagship carrier Lufthansa said on Tuesday that the implementation of its bailout deal had not been secured and it might need to apply for creditor protection proceedings around the time of its extraordinary general meeting.

The statement came after German investor Heinz Hermann Thiele sharply criticised a 9 billion euro ($10.14 billion)bailout deal for carrier Lufthansa, saying he had raised his stake in the group to more than 15% and hoped alternative options could be explored.


https://www.reuters.com/article/healthc ... SS8N2DH07J


It is apparent that billionaire speculators are not thankful for taxpayer intervention.
I hope that the many supporters of the bailout see that they are advocating to support greedy, immoral, speculators.

In my opinion, LH shareholders should be allowed to lose everything and the company should be fully nationalized, through an insolvency procedure.
This is the only way to preserve the jobs and give the company a sustainable future.

Palihapitiya is right, who cares if the Billionaires get wiped out when Main Street people are getting wiped out.
Leaving Lufthansa in the hands of Billionaire speculators is not the right choice in a crisis like this.

https://www.youtube.com/watch?v=NvEWez59fbI

Here an explanation of why this Lufthansa investor is unhappy (equity dilution):

https://www.youtube.com/watch?v=NvEWez59fbI

It is also apparent now who was driving up the LH share price in the past weeks
nothing new under the sun, the Capitalism usually socialize the losses and privatize the profits. So let's socialize the losses once again.
 
max999
Posts: 1219
Joined: Fri Dec 09, 2005 11:05 am

Re: Lufthansa: 10B EUR bailout - Update

Fri Jun 19, 2020 10:50 am

Noshow wrote:
Next week is the shareholder meeting needed to greenlight their strategy. It feels like their new billionaire investor aims for chapter 11 instead of the government bailout package. With interest rates so low the costs of Lufty's retirement and pension scheme grew so much that this might be seen as a way to better start from scratch without those old obligations.


Can you tell me if a US-style Chapter 11 bankruptcy exist in Germany?

My understanding is that European bankruptcy law is not that flexible when it comes to reorganization. European bankruptcies tend to lead to administration and the goal is to liquidate the company by selling assets at the best prices possible to repay the debtors. While in the US, bankrupt companies are reorganized with the goal of keeping the firm alive, while unsecured debtors are often screwed over.

But I'm not an expert in bankruptcy.
All the things I really like to do are either immoral, illegal, or fattening.
 
MIflyer12
Posts: 7790
Joined: Mon Feb 18, 2013 11:58 pm

Re: Lufthansa: 10B EUR bailout - Update

Fri Jun 19, 2020 11:03 am

Noshow wrote:
Next week is the shareholder meeting needed to greenlight their strategy. It feels like their new billionaire investor aims for chapter 11 instead of the government bailout package.


Why would he want that? He would likely be wiped out - his ownership ended - in a U.S.-style Chapter 11 proceeding.

IMHO the core of his complaint is that he doesn't want to see his share of the company diluted by the German state taking a 20% equity stake for its investment. He wants state money but not state ownership -- largely what U.S. carriers got with the first round of grants and loans under the CARES Act.
 
Noshow
Posts: 1515
Joined: Wed Jun 15, 2016 3:20 pm

Re: Lufthansa: 10B EUR bailout - Update

Fri Jun 19, 2020 11:55 am

Something like US Chapter-11 would be called "Schutzschirmverfahren". That status might be used to renegotiate wages and stuff and drop or separate their pension fund.
 
RvA
Posts: 375
Joined: Tue Sep 15, 2015 12:37 pm

Re: Lufthansa: 10B EUR bailout - Update

Fri Jun 19, 2020 12:24 pm

Noshow wrote:
Something like US Chapter-11 would be called "Schutzschirmverfahren". That status might be used to renegotiate wages and stuff and drop or separate their pension fund.


Similar to what Condor is in right now I believe?
 
RvA
Posts: 375
Joined: Tue Sep 15, 2015 12:37 pm

Re: Lufthansa: 10B EUR bailout - Update

Fri Jun 19, 2020 12:25 pm

A lot of jobs potentially being played around with here. Will be interesting to see what happens next week.
 
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seahawk
Posts: 9627
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Re: Lufthansa: 10B EUR bailout - Update

Fri Jun 19, 2020 1:39 pm

Noshow wrote:
Something like US Chapter-11 would be called "Schutzschirmverfahren". That status might be used to renegotiate wages and stuff and drop or separate their pension fund.


No, as one of the first steps of a Schutzschirmverfahren would be to check if you save the business as is through a debt to equity exchange. And that is exactly what the government has offered, so in that case there is no way to refuse the deal.
 
Noshow
Posts: 1515
Joined: Wed Jun 15, 2016 3:20 pm

Re: Lufthansa Group: 10B EUR bailout - Update

Sat Jun 20, 2020 2:53 pm

The stock holder majority still has to green light the government bailout. If they don't agree Lufthansa will be in need of a lot of money from other sources fast. This might work out or not. Then we could be pretty close to the scenario described above sooner than later. The next problem in case of serious Lufthansa troubles might be Swiss that is fully owned by Lufthansa. I hope this doesn't end in any showdown but mutual understanding to get the company back to business.
 
Vicenza
Posts: 85
Joined: Sun Apr 19, 2020 3:21 pm

Re: Lufthansa: 10B EUR bailout - Update

Sat Jun 20, 2020 4:50 pm

MIflyer12 wrote:
Noshow wrote:
Next week is the shareholder meeting needed to greenlight their strategy. It feels like their new billionaire investor aims for chapter 11 instead of the government bailout package.


Why would he want that? He would likely be wiped out - his ownership ended - in a U.S.-style Chapter 11 proceeding.



There is no Chapter 11 'bankruptcy', or equivalent, in Europe.
 
Noshow
Posts: 1515
Joined: Wed Jun 15, 2016 3:20 pm

Re: Lufthansa Group: 10B EUR bailout - Update

Sat Jun 20, 2020 5:17 pm

There is something similar called "Insolvenz" and step one is the "Schutzschirmverfahren" mentioned above.
 
Blerg
Posts: 3996
Joined: Tue Jan 09, 2018 11:42 am

Re: Lufthansa Group: 10B EUR bailout - Update

Sun Jun 21, 2020 5:25 am

But why exactly do they need €9 billion? What do they plan on spending it on? I mean they have a lot of cash reserves left so it's not like they are on the brink of bankruptcy?
 
Blerg
Posts: 3996
Joined: Tue Jan 09, 2018 11:42 am

Re: Lufthansa Group: 10B EUR bailout - Update

Sun Jun 21, 2020 6:04 am

More trouble in paradise, now it seems that Verdi is unhappy with the layoffs and they want greater government involvement in Lufthansa.

Source: https://www.airliners.de/jetzt-lufthans ... aket/56047

Also, according to Bloomberg, Austria has not yet released aid to Austrian Airlines as it awaits the result of the ongoing negotiations regarding LH aid in Germoney. Also, could someone clarify what exactly do they mean by this paragraph, especially the part about airport charges being lowered:

Austria has negotiated a 10-year guarantee for Lufthansa’s presence and a commitment that the airline will grow at the same pace in Vienna as at the rival German hubs. This would put pressure on Munich and Frankfurt, after suppliers, authorities and the airport itself all agreed to lower costs to make Vienna more attractive, the people.

https://www.bloomberg.com/news/articles ... -coming-in
 
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LTU330
Posts: 257
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Re: Lufthansa Group: 10B EUR bailout - Update

Sun Jun 21, 2020 8:39 am

Blerg wrote:
But why exactly do they need €9 billion? What do they plan on spending it on? I mean they have a lot of cash reserves left so it's not like they are on the brink of bankruptcy?


Maybe they need the money to repay the thousands and thousands of people who had their money taken for Flights that didn't happen ? They owe me more than 3000 Euros and that does not include "virtual money" for a couple of other Flights I agreed to be rebooked. Normally if you request a refund for a Flight rather than a Voucher or rebooking (for a cancelled flight) it is refunded within a week. I am waiting more than three months now.
 
Noshow
Posts: 1515
Joined: Wed Jun 15, 2016 3:20 pm

Re: Lufthansa Group: 10B EUR bailout - Update

Sun Jun 21, 2020 9:01 am

Billions what for?
It's their old pension fund that hurts big time. However you could see that coming for many years.
 
RvA
Posts: 375
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Re: Lufthansa Group: 10B EUR bailout - Update

Sun Jun 21, 2020 9:54 am

Blerg wrote:
But why exactly do they need €9 billion? What do they plan on spending it on? I mean they have a lot of cash reserves left so it's not like they are on the brink of bankruptcy?


They’re asking for up to 9B, not outright 9B.
I think that amount is needed to calmly weather the storm without large amounts of lay offs and with the flexibility to reactivate aircraft and staff sooner if given the chance. Lufthansa Group is bigger in terms of employees (they don’t just fly plans but also do a lot of behind the scenes systems and consulting that is used by airlines the world over) than the US airlines. This amount of people means without a larger cash injection it’ll mean larger amounts of layoffs which they are trying to avoid.
This is my own interpretation anyway.
 
Blerg
Posts: 3996
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Re: Lufthansa Group: 10B EUR bailout - Update

Sun Jun 21, 2020 10:02 am

RvA wrote:
Blerg wrote:
But why exactly do they need €9 billion? What do they plan on spending it on? I mean they have a lot of cash reserves left so it's not like they are on the brink of bankruptcy?


They’re asking for up to 9B, not outright 9B.
I think that amount is needed to calmly weather the storm without large amounts of lay offs and with the flexibility to reactivate aircraft and staff sooner if given the chance. Lufthansa Group is bigger in terms of employees (they don’t just fly plans but also do a lot of behind the scenes systems and consulting that is used by airlines the world over) than the US airlines. This amount of people means without a larger cash injection it’ll mean larger amounts of layoffs which they are trying to avoid.
This is my own interpretation anyway.


So then is it safe to assume that the 22.000 people they want to fire is the small amount of layoffs? From that article I posted half of them are in Germany.
 
mxaxai
Posts: 1812
Joined: Sat Jun 18, 2016 7:29 am

Re: Lufthansa Group: 10B EUR bailout - Update

Sun Jun 21, 2020 11:02 am

LTU330 wrote:
Maybe they need the money to repay the thousands and thousands of people who had their money taken for Flights that didn't happen ? They owe me more than 3000 Euros and that does not include "virtual money" for a couple of other Flights I agreed to be rebooked. Normally if you request a refund for a Flight rather than a Voucher or rebooking (for a cancelled flight) it is refunded within a week. I am waiting more than three months now.

Everybody in the industry is facing this problem. Ryanair was quoted that they lack the manpower to process all the refunds quickly, and that most refunds will take several months and up to a year. How convenient ...
 
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F737NG
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Re: Lufthansa Group: 10B EUR bailout - Update

Sun Jun 21, 2020 11:08 am

Lufthansa chief executive Carsten Spohr has admitted that the group’s €9bn bailout package from the German government is larger than what it needs to survive, and is designed to ensure the airline maintains a “global leading position”.
[...]
On Wednesday, after Lufthansa’s supervisory board had accepted the EU’s conditions, Mr Spohr conceded that with €4bn in existing liquidity, the Frankfurt-based group did not need the full €9bn from the administration of Chancellor Angela Merkel.

Asked by the Financial Times if Lufthansa could have got by with less, Mr Spohr said: “Yes, but it was not just about survival.”

He added: “The German government was focused on how Lufthansa can maintain its position as a German global champion, not just how it can avoid insolvency.”

Speaking to analysts earlier, the former pilot said the airline sought a larger sum because “we didn’t want to go to the edge of what we needed”.

Source: https://www.ft.com/content/5c32cd83-e639-4421-9ae2-8165ecdd5097


If Margrethe Vestager, the EU’s competition chief, really does believe that there is a “high risk” of market distortion, then she should be demanding more than just the relinquishing of only 24 slots at two airports and a few aircraft.

The whole process stinks of German protectionism of a 'national champion' and makes a mockery of the whole concept of the free market.
Giving up a pitifully small number of slots in exchange for a substantial financial injection is not a big enough penalty. That the major investors are more worried about the dilution of their investment than the trading conditions and the EU Commission's remedies facing the airline group, speaks volumes.

I don't blame anyone for thinking that LH should go through insolvency if that's what ends up happening. Taxpayers should not be picking up the bill for corporate protectionism.
I fully agree with the Austrian government in refusing to pay any aid money to the group until their demands of a guarantee are met.

What is worrying is how the European commercial airline market will look after the Coronavirus recession. With two mega airline groups and a big third player dominating their home markets, plus a lot of the remaining airlines on shaky ground outside of the big two LCCs, the market doesn't look great for the European consumer.
 
RvA
Posts: 375
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Re: Lufthansa Group: 10B EUR bailout - Update

Sun Jun 21, 2020 11:28 am

Blerg wrote:
RvA wrote:
Blerg wrote:
But why exactly do they need €9 billion? What do they plan on spending it on? I mean they have a lot of cash reserves left so it's not like they are on the brink of bankruptcy?


They’re asking for up to 9B, not outright 9B.
I think that amount is needed to calmly weather the storm without large amounts of lay offs and with the flexibility to reactivate aircraft and staff sooner if given the chance. Lufthansa Group is bigger in terms of employees (they don’t just fly plans but also do a lot of behind the scenes systems and consulting that is used by airlines the world over) than the US airlines. This amount of people means without a larger cash injection it’ll mean larger amounts of layoffs which they are trying to avoid.
This is my own interpretation anyway.


So then is it safe to assume that the 22.000 people they want to fire is the small amount of layoffs? From that article I posted half of them are in Germany.


26.000 if I am not mistaken and I believe it is a total over a period of time not immediately. But yes that’s the small amount. The group has over 130K employees in total look at the numbers BA is talking about (I believe 12k out of 45k) and the 30% being mentioned in the US to get an idea of what could happen at a minimum if they can’t secure the funds they say they need.
I also believe the Austrian and Swiss deals depend on what happens with LH in Germany so those are also not yet guaranteed. Very important week for LH and for many thousands (plus the 3-5x extra indirectly affected) of people. Tragic things happening in this industry all over and no one small to large is spared.
 
Noshow
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Joined: Wed Jun 15, 2016 3:20 pm

Re: Lufthansa Group: 10B EUR bailout - Update

Sun Jun 21, 2020 12:11 pm

IIRC the term used for their upcoming redundancies was "the equivalent of 22.000 full time jobs". So including part time 26.000 might be about right.

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