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.

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.

Apart from the questions of protectionism (and who can be surprised?), general subsidies of business, and loss of competition, this American is really puzzled by this example of German corporate governance. In the U.S., minority investors can ask for change on the Board of Directors (and submit their own candidates for consideration). They can ask the Board to replace key executives. They can submit a slate of Board candidates for a binding general shareholder vote. They DON'T get to circumvent management and ask for a meeting with the government to renegotiate a major finance matter.

MIflyer12 wrote:

In the U.S., minority investors can ask for change on the Board of Directors (and submit their own candidates for consideration). They can ask the Board to replace key executives. They can submit a slate of Board candidates for a binding general shareholder vote. They DON'T get to circumvent management and ask for a meeting with the government to renegotiate a major finance matter.

At this point, Mr. Thiele is essentially a majority investor. He already owns 15% and prepared to invest another 1 billion €, i. e. 21% of LH's market worth. Since minority owners often don't show up for shareholder meetings, he can easily block any decision during such an event.

With his current net worth, Mr. Thiele could buy Lufthansa three times. If he wants LH to do something, they have no choice but to obey.

Not true. First he must find enough people willing to sell all those shares so fast. Mind you many LH investors are small package stock owners. Second the government is set to have at least 25,1 percent having a veto itself. It's a lot of show don't believe anything they want you to believe.

Noshow wrote:

Not true. First he must find enough people willing to sell all those shares so fast. Mind you many LH investors are small package stock owners. Second the government is set to have at least 25,1 percent having a veto itself. It's a lot of show don't believe anything they want you to believe.

The government doesn't own those shares yet, the current shareholders have to agree first. And I would assume that many small stock owners would be more than happy to get out of LH for a reasonable price before the government dilutes the stock value, or before LH declares bankruptcy in a worst case scenario.

But why can't he do what the government wants and just dilute the shares himself and increase his ownership in the airline? If he has the financial means then why not, especially since he seems to care enough about Lufthansa.

Blerg wrote:

But why can't he do what the government wants and just dilute the shares himself and increase his ownership in the airline? If he has the financial means then why not, especially since he seems to care enough about Lufthansa.

Wants to go out with a bang? Unhappy FF member? :p

Blerg wrote:

But why can't he do what the government wants and just dilute the shares himself and increase his ownership in the airline? If he has the financial means then why not, especially since he seems to care enough about Lufthansa.

If he is only the largest single shareholder that should answer the question, I think 15% is the number I read, imagine the power of the other 85% if they got together.

par13del wrote:

Blerg wrote:

But why can't he do what the government wants and just dilute the shares himself and increase his ownership in the airline? If he has the financial means then why not, especially since he seems to care enough about Lufthansa.

If he is only the largest single shareholder that should answer the question, I think 15% is the number I read, imagine the power of the other 85% if they got together.

Exactly. Unfortunately only 38% or so from what I read will even vote so he alone will be able to make or break this deal.

He owns 15 percent of Lufthansa's shares plus x now. (after announcing 15 percent recently he sold some of his other private stock valued 700 million Euros, likely to generate more cash to buy even more Lufthansa stock)
Because only 38 percent of Lufthansa's stock owners got preregistered as voters for this upcoming thursday's general assembly Mr. Thiele has quiet some weight now as they need two thirds of the actual votes on thursday to green light the government bailout. He seems to have a history of sort of similar ego trips. He is said to demand the government only to give loans to LH not the government becoming some shareholder.

mxaxai wrote:

MIflyer12 wrote:

In the U.S., minority investors can ask for change on the Board of Directors (and submit their own candidates for consideration). They can ask the Board to replace key executives. They can submit a slate of Board candidates for a binding general shareholder vote. They DON'T get to circumvent management and ask for a meeting with the government to renegotiate a major finance matter.

At this point, Mr. Thiele is essentially a majority investor. He already owns 15% and prepared to invest another 1 billion €, i. e. 21% of LH's market worth. Since minority owners often don't show up for shareholder meetings, he can easily block any decision during such an event.

With his current net worth, Mr. Thiele could buy Lufthansa three times. If he wants LH to do something, they have no choice but to obey.

Then let him buy the shares and gain majority control of the company. His net worth isn't relevant until he invests it. His purchases should be guided by the relevant takeover rules in Germany.

Other shareholders can be passive - the 100% - 38% who haven't registered to vote - but 15% isn't a majority share, nor should it be a blocking share.

MIflyer12 wrote:

Other shareholders can be passive - the 100% - 38% who haven't registered to vote - but 15% isn't a majority share, nor should it be a blocking share.

Not sure what your point is. If less than 50% of shareholders register, the remaining voting shareholders need a 2/3-majority to pass decisions (per German law). His 15% ownership give him 39% of all votes during the upcoming meeting, since only 38% worth of shareholders registered. That's de-facto a blocking share.
It's not his fault that 60+% of shareholders don't give a fuck about their money.

I'm not an expert on US business law but I would imagine that, for example, Jeff Bezos or Bill Gates would have similar influence after buying a large minority share of DL or UA. Though there is the difference that the US have several large airlines whereas Germany has only LH, so it's easier to say that LH is "too big to fail".

So who is this Thiele guy? Where does his money come from and what kind of business is he into?

I read some online sources about the meeting and it seems like there isn't much to report on it. I suppose they didn't agree on anything. Will be interesting to see what happens in just two days, somehow I think the vote will go through.

It looks very likely that LH will have to go into insolvency now.

seahawk wrote:

It looks very likely that LH will have to go into insolvency now.

There will be a press conference at 2PM CET where the results of yesterdays' meeting will be announced.

If you already have any reliable information at this point that leads you to your statement, please care to share.

If they do end up going for insolvency, what would actually mean for the airline in practical terms?

Split up.

Blerg wrote:

If they do end up going for insolvency, what would actually mean for the airline in practical terms?

We do not know, as there are many different forms of insolvency and we do not know what Thiele has in mind. Going by his history he could very well be interested in split up and sale of assets to make a profit.

So no wonder the Austrian government is waiting with the aid for OS. This situation with LH is turning into such a mess.

Blerg wrote:

So who is this Thiele guy? Where does his money come from and what kind of business is he into?

A 2 second google search would give you: https://en.wikipedia.org/wiki/Heinz_Hermann_Thiele

Thiele began to work for Knorr-Bremse in 1969 as a patent lawyer. He joined the company's executive board (Vorstand) in 1985. That year, when the grandson of founder Georg Knorr wanted to sell his shares, Thiele was commissioned to find a buyer. During the process, Deutsche Bank told him that if he bought it himself, the bank would act as guarantor.[2] He purchased a controlling stake and later became sole owner.[3]

After becoming chief executive in 1987, Thiele initiated big structural changes and narrowed the group’s focus to braking technology.[4] He joined the company's supervisory board (Aufsichtsrat) in 2007. In 2018, he announced plans to take the company public on the Frankfurt Stock Exchange in what was considered the country’s second-largest initial public offering of 2018.[5]

Blerg wrote:

So who is this Thiele guy? Where does his money come from and what kind of business is he into?

He's an angry old man, now abusing the moment to throw "his" toy at the Federal Government.

Both OS and LX as well I think are not receiving their support until the German situation is resolved. This could be a very bumpy road ahead for the group as a whole. I really wonder what this guy’s plans are and given likely thousands of people’s jobs depend on it I would hope he cares to share.
I always also wonder if behind the scenes maybe he and the LH CEO have had some conversations and have a plan?

787X30 wrote:

Blerg wrote:

So who is this Thiele guy? Where does his money come from and what kind of business is he into?

He's an angry old man, now abusing the moment to throw "his" toy at the Federal Government.

So this could actually be a political crusade.
15% of 4 billion is only 600 million.
This gentleman bought himself the option to detonate Lufthansa for only 4% of his net worth.

Plus considering Lufthansa assets, he may get some of it back in a liquidation.

Waterbomber2 wrote:

787X30 wrote:

Blerg wrote:

So who is this Thiele guy? Where does his money come from and what kind of business is he into?

He's an angry old man, now abusing the moment to throw "his" toy at the Federal Government.

So this could actually be a political crusade.
15% of 4 billion is only 600 million.
This gentleman bought himself the option to detonate Lufthansa for only 4% of his net worth.

Plus considering Lufthansa assets, he may get some of it back in a liquidation.

So it is his fault that the silent majority lend their consent to what he is doing?

So anyone know what happened at the press conference today?

Following a successful restart, LH Group's Austrian Airlines will bring back a total of 36 into service this July. Among these are three B767s that will be used to resume long-haul flying.

https://airwaysmag.com/airlines/austria ... t-in-july/

Blerg wrote:

So anyone know what happened at the press conference today?

Not sure anything more happened than the govt saying their deal is a good one. I don’t think so?

RvA wrote:

Blerg wrote:

So anyone know what happened at the press conference today?

Not sure anything more happened than the govt saying their deal is a good one. I don’t think so?

Which should be an indication of the fact that they didn't come to an agreement. I guess Thursday will be a very interesting day.

Blerg wrote:

RvA wrote:

Blerg wrote:

So anyone know what happened at the press conference today?

Not sure anything more happened than the govt saying their deal is a good one. I don’t think so?

Which should be an indication of the fact that they didn't come to an agreement. I guess Thursday will be a very interesting day.

Yep it sure will. I do wonder if there’s more to this behind the scenes because Thiele’s surely not out to go and sell this company in parts, not with all the political issues that come with it (within Germany but then with the foreign subsidiaries in particular too). Let’s see, get the popcorn ready.

So has Thiele actually come forward to say what he thinks should be done? I mean is he seriously asking for 9 billion with no strings attached? No requirements or no requests from those who are supposed to give all that money? Seems surreal to me, disillusioned even.

Blerg wrote:

So has Thiele actually come forward to say what he thinks should be done? I mean is he seriously asking for 9 billion with no strings attached? No requirements or no requests from those who are supposed to give all that money? Seems surreal to me, disillusioned even.

Seems like, unless he just wants the deal to fail and either have the benefit once the stocks go back up or he just wants to to fail so he can sell of parts of the business as he’s done before with other companies. Or something different entirely. Maybe he’s just playing the bad guy to get the unions in line?

davidjohnson6 wrote:

If somebody is a billionaire, I assume the BND has plenty of info on him. Perhaps time for a Govt minister to have a chat and persuade Thiele that LH forms part of critical national infrastructure ?

Yes, I know Germany has all sorts of laws after what happened 75 years ago...

And if it was me and my money, then that government minister would get a curt foxtrot oscar from me. If it's such a critical national infrastructure then Angie et al can cough up a bit...

Lufthansa's ballooning personnel costs were never going to be sustainable in the long term - anybody could have seen that... Wonder how smug all those striking feel now...

If you listen carefully what LH Management has said these days, they know the deal with Germany will not happen, because Mr. Thiele will block it. All their internal communication is to get their employees ready for the unthinkable. And do not talk about the unions. They are just as ignorant and arrogant as they have ever been at LH. They will have some bad headache on Friday morning.
Just think about the quietness. There is a phrase here in germany that says "If you cannot say something positive, better say nothing".
As for the law in Germany, if you buy shares of 30 percent of a company, then you have to make the other shareholders an offer for a takeover. Long story short: If Thiele piles up 30 percent shares after he blocked the state aid, he has to make an offer for takeover. Then his plan is clear. And by the way, if he is able to get 25 percent (that is the so called "Sperrminoritaet") he can pull Spohr behind him on a chain as long he wants, wherever he wants to go...

JLGordon wrote:

If you listen carefully what LH Management has said these days, they know the deal with Germany will not happen, because Mr. Thiele will block it. All their internal communication is to get their employees ready for the unthinkable. And do not talk about the unions. They are just as ignorant and arrogant as they have ever been at LH. They will have some bad headache on Friday morning.
Just think about the quietness. There is a phrase here in germany that says "If you cannot say something positive, better say nothing".
As for the law in Germany, if you buy shares of 30 percent of a company, then you have to make the other shareholders an offer for a takeover. Long story short: If Thiele piles up 30 percent shares after he blocked the state aid, he has to make an offer for takeover. Then his plan is clear. And by the way, if he is able to get 25 percent (that is the so called "Sperrminoritaet") he can pull Spohr behind him on a chain as long he wants, wherever he wants to go...

If the vote on Thursday fails, LH is basically bankrupt. There is no way how Thiele could benefit from it because the stockholder equity would be wiped out and there is no way this could be stopped. LH has unpaid bills left and right, has not refunded travelers for cancelled flights since march whereby it has about 1,8 billion EUR in un-refunded tickets. The only reason it did not yet file for bankruptcy is that there is this agreed deal with the government. If that is not approved, then the management should basically file for bankruptcy immediately, otherwise they are in risk of being guilty of delaying bankruptcy (Insolvenzverschleppung).

marosbts wrote:

JLGordon wrote:

If you listen carefully what LH Management has said these days, they know the deal with Germany will not happen, because Mr. Thiele will block it. All their internal communication is to get their employees ready for the unthinkable. And do not talk about the unions. They are just as ignorant and arrogant as they have ever been at LH. They will have some bad headache on Friday morning.
Just think about the quietness. There is a phrase here in germany that says "If you cannot say something positive, better say nothing".
As for the law in Germany, if you buy shares of 30 percent of a company, then you have to make the other shareholders an offer for a takeover. Long story short: If Thiele piles up 30 percent shares after he blocked the state aid, he has to make an offer for takeover. Then his plan is clear. And by the way, if he is able to get 25 percent (that is the so called "Sperrminoritaet") he can pull Spohr behind him on a chain as long he wants, wherever he wants to go...

If the vote on Thursday fails, LH is basically bankrupt. There is no way how Thiele could benefit from it because the stockholder equity would be wiped out and there is no way this could be stopped. LH has unpaid bills left and right, has not refunded travelers for cancelled flights since march whereby it has about 1,8 billion EUR in un-refunded tickets. The only reason it did not yet file for bankruptcy is that there is this agreed deal with the government. If that is not approved, then the management should basically file for bankruptcy immediately, otherwise they are in risk of being guilty of delaying bankruptcy (Insolvenzverschleppung).

Unlikely, the asset worth is still higher. Swiss, LH Technik and so on. He would probably regain quite a big part of his investment.

So would flights operate normally from Friday or would they be grounded? Can a business that has applied for bankruptcy keep on operating?

seahawk wrote:

Unlikely, the asset worth is still higher. Swiss, LH Technik and so on. He would probably regain quite a big part of his investment.

Don´t think so. If the LH government bailout fails, also the OS government bailout is void. This means Austrian would bite the dust. They would send Brussels airlines into bankruptcy virtually immediately. Swiss would most likely survive but I guess it would be nationalized after the government invested lots of money into it already. SXD is bankrupt. And selling core business parts like LH Technik would be at a steep discount, same for other LH subsidiaries, leaving LH nothing but an empty shell with even lower chances to survive.

On the other hand, there are massive liabilities for LH, for leasing payments, aircraft orders, unrefunded tickets, Miles and More points, unpaid invoices. By now this is in the billions of euro. Also, LH as any other airline is burning cash in tens of millions daily - according to reports the cash burn rate is 24 million per day. If the shareholders fail to approve the deal, it will take weeks if not months until new financing is negotiated and a further billion of cash is burned. And LH has value only until it has some cash to keep operating flights.

Under the current conditions, where airlines are almost toxic assets, I don´t see any other way to get Lufthansa saved than the bailout. Anyone else who would be ready to put 9 billion euro into a company which has a current valuation of 5 billion will require a far higher share than the government does.

marosbts wrote:

seahawk wrote:

Unlikely, the asset worth is still higher. Swiss, LH Technik and so on. He would probably regain quite a big part of his investment.

Don´t think so. If the LH government bailout fails, also the OS government bailout is void. This means Austrian would bite the dust. They would send Brussels airlines into bankruptcy virtually immediately. Swiss would most likely survive but I guess it would be nationalized after the government invested lots of money into it already. SXD is bankrupt. And selling core business parts like LH Technik would be at a steep discount, same for other LH subsidiaries, leaving LH nothing but an empty shell with even lower chances to survive.

On the other hand, there are massive liabilities for LH, for leasing payments, aircraft orders, unrefunded tickets, Miles and More points, unpaid invoices. By now this is in the billions of euro. Also, LH as any other airline is burning cash in tens of millions daily - according to reports the cash burn rate is 24 million per day. If the shareholders fail to approve the deal, it will take weeks if not months until new financing is negotiated and a further billion of cash is burned. And LH has value only until it has some cash to keep operating flights.

Under the current conditions, where airlines are almost toxic assets, I don´t see any other way to get Lufthansa saved than the bailout. Anyone else who would be ready to put 9 billion euro into a company which has a current valuation of 5 billion will require a far higher share than the government does.

Any resources for those billions from lease payments and refunds you mention would be interested in read in more, thanks.

marosbts wrote:

seahawk wrote:

Unlikely, the asset worth is still higher. Swiss, LH Technik and so on. He would probably regain quite a big part of his investment.

Don´t think so. If the LH government bailout fails, also the OS government bailout is void. This means Austrian would bite the dust. They would send Brussels airlines into bankruptcy virtually immediately. Swiss would most likely survive but I guess it would be nationalized after the government invested lots of money into it already. SXD is bankrupt. And selling core business parts like LH Technik would be at a steep discount, same for other LH subsidiaries, leaving LH nothing but an empty shell with even lower chances to survive.

On the other hand, there are massive liabilities for LH, for leasing payments, aircraft orders, unrefunded tickets, Miles and More points, unpaid invoices. By now this is in the billions of euro. Also, LH as any other airline is burning cash in tens of millions daily - according to reports the cash burn rate is 24 million per day. If the shareholders fail to approve the deal, it will take weeks if not months until new financing is negotiated and a further billion of cash is burned. And LH has value only until it has some cash to keep operating flights.

Under the current conditions, where airlines are almost toxic assets, I don´t see any other way to get Lufthansa saved than the bailout. Anyone else who would be ready to put 9 billion euro into a company which has a current valuation of 5 billion will require a far higher share than the government does.

I would not expect the survival of Lufthansa.

I don't think OS would bite the dust. Austrian government has put money aside for their rescue. My guess is that they would re-nationalize the airline and pump those millions into their survival. For the Swiss I don't know as they already issued those loan guarantees. Though I suppose LX can survive on its own, after all, they have been profitable for a while now, very profitable even.

seahawk wrote:

marosbts wrote:

seahawk wrote:

Unlikely, the asset worth is still higher. Swiss, LH Technik and so on. He would probably regain quite a big part of his investment.

Don´t think so. If the LH government bailout fails, also the OS government bailout is void. This means Austrian would bite the dust. They would send Brussels airlines into bankruptcy virtually immediately. Swiss would most likely survive but I guess it would be nationalized after the government invested lots of money into it already. SXD is bankrupt. And selling core business parts like LH Technik would be at a steep discount, same for other LH subsidiaries, leaving LH nothing but an empty shell with even lower chances to survive.

On the other hand, there are massive liabilities for LH, for leasing payments, aircraft orders, unrefunded tickets, Miles and More points, unpaid invoices. By now this is in the billions of euro. Also, LH as any other airline is burning cash in tens of millions daily - according to reports the cash burn rate is 24 million per day. If the shareholders fail to approve the deal, it will take weeks if not months until new financing is negotiated and a further billion of cash is burned. And LH has value only until it has some cash to keep operating flights.

Under the current conditions, where airlines are almost toxic assets, I don´t see any other way to get Lufthansa saved than the bailout. Anyone else who would be ready to put 9 billion euro into a company which has a current valuation of 5 billion will require a far higher share than the government does.

I would not expect the survival of Lufthansa.

I think you can expect this, the question is in what shape. Germany will not be without LH, in some shape or form it will survive.

Blerg wrote:

I don't think OS would bite the dust. Austrian government has put money aside for their rescue. My guess is that they would re-nationalize the airline and pump those millions into their survival. For the Swiss I don't know as they already issued those loan guarantees. Though I suppose LX can survive on its own, after all, they have been profitable for a while now, very profitable even.

I believe I read that those loan guarantees for Swiss are not finalised yet either as they depend on the German package. But like you say, I don’t believe Switzerland would let anything happen to LX anyway.

I didn't take this Thiele issue too seriously until I watched the Youtube video linked above.
Thiele seems to be opinionated and very critical of the incumbent government.
"Our government has made very significant errors in the past 10 years", mentionning the exit out of nuclear energy without an alternative plan in place causing increase in energy costs, the sanctions towards Russia for the annexation of Crimea that has decimated exports, and the immigration policy.

He seems to have started purchasing LH shares in March, he does not seem to have had a position before that.

I don't think that this is about money or profiting off the bailout.
Angela Merkel is profiling Lufthansa as Germany's champion of enterprises that needs to be saved, and Thiele might want to destroy LH just to make a political statement.

Thiele seems to have a very rightist view, so he may not agree with state aids in most forms.

RvA wrote:

seahawk wrote:

marosbts wrote:

Don´t think so. If the LH government bailout fails, also the OS government bailout is void. This means Austrian would bite the dust. They would send Brussels airlines into bankruptcy virtually immediately. Swiss would most likely survive but I guess it would be nationalized after the government invested lots of money into it already. SXD is bankrupt. And selling core business parts like LH Technik would be at a steep discount, same for other LH subsidiaries, leaving LH nothing but an empty shell with even lower chances to survive.

On the other hand, there are massive liabilities for LH, for leasing payments, aircraft orders, unrefunded tickets, Miles and More points, unpaid invoices. By now this is in the billions of euro. Also, LH as any other airline is burning cash in tens of millions daily - according to reports the cash burn rate is 24 million per day. If the shareholders fail to approve the deal, it will take weeks if not months until new financing is negotiated and a further billion of cash is burned. And LH has value only until it has some cash to keep operating flights.

Under the current conditions, where airlines are almost toxic assets, I don´t see any other way to get Lufthansa saved than the bailout. Anyone else who would be ready to put 9 billion euro into a company which has a current valuation of 5 billion will require a far higher share than the government does.

I would not expect the survival of Lufthansa.

I think you can expect this, the question is in what shape. Germany will not be without LH, in some shape or form it will survive.

Normally yes, but not in that case imho. If Thiele is eager to force Lufthansa into insolvency and refuses state aid, the state won´t save them. And after that I can really not see the brand being brought back. Imho the state would probably take control of Condor and then build them up. There is too much political face to be lost, to give in to an investor at the moment. Once they file for insolvency, the state will imho not jump in.

does the bankruptcy of sunexpress Germany (also LH was involved) has anything to do with this topic?
https://www.dw.com/en/germany-lufthansa ... a-53918148

It's part of the retreat. Eurowings might take over their business. Sun Express Deutschland had provided the former long range airplanes for Eurowings as well. Something that turned out to be chaotic. Not sure whom to blame for it?