Lufthansa chief says bailout may not pass on lack of support
INTERNATIONAL – Deutsche Lufthansa AG Chief Executive Officer Carsten Spohr said the German government’s 9 billion-euro ($10.1 billion) bailout plan for the airline was at risk because it will now face a higher threshold for its final passage.
Just 38% of shareholders registered to vote at the carrier’s extraordinary general meeting on Thursday, Spohr said in a letter to employees, seen by Bloomberg on Sunday. This level means the company’s management now needs two-thirds of the stockholders that registered to approve the bailout or risk tipping Europe’s biggest airline into insolvency. Had more than 50% registered, a simple majority in favor would have sufficed.
The low attendance means Heinz Hermann Thiele, a German billionaire and Lufthansa’s biggest shareholder with a 15% stake, can scuttle the deal. Thiele last week said he didn’t like the plan -- reached after weeks of intensive negotiations with the government -- sparking speculation that he’d use his votes to shoot it down with the aim of reopening talks.
Spohr in the letter said he wasn’t sure whether the deal would pass, adding the company would engage in negotiations with the government before filing for insolvency, a scenario he said was his priority to avoid.
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A meeting has been scheduled for Monday between Thiele, Spohr and the two German ministers who brokered the deal, Finance Minister Olaf Scholz and Economy Minister Peter Altmaier, according to people familiar with the matter, who asked not to be identified because the information is confidential. Thiele is expected to call for last-minute changes to the bailout package.
Like airlines worldwide, Lufthansa is fighting for survival after the coronavirus pandemic punctured a decades-long boom in aviation. The deal it struck in May for a package of loans, equity and credit guarantees is designed to stave off bankruptcy. The group has said it faces a cash crunch and previously warned it might not be able to pay its employees in July.
Thiele is particularly sore about plans for Germany to take a 20% stake in the company for the nominal share price of 2.56 euros, a move that would enable the state to book a healthy profit if Lufthansa can weather the crisis and keep flying. The billionaire, whose own stockholding will be diluted if the deal goes ahead, last week accused the state of profiteering.Bloomberg