The nerve war over billions of dollars in state aid for the corona-damaged Lufthansa is getting tougher.
While the first reports of an alleged agreement were circulating on Tuesday morning, the management of the Dax Group is thinking aloud about a possible insolvency, which could be handled under the example of Condor in self-management. On the other hand, the Swiss Subsidiary Swiss, which according to media reports can expect state-guaranteed loans of 1.5 billion Swiss francs (1.4 billion euros), has made further progress.
There is still no agreement on state aid, the German government said on Tuesday morning. According to further dpa information, the talks are not expected to end this week with a result. A company of this size and the potential level of support must be handled wisely, it was said.
In the morning, Lufthansa’s share price had initially risen significantly at the start of trading. The reason was a report by the online business magazine “Business Insider” about an alleged agreement at the working level. According to this, the Federal Republic of Germany is to pump around 9 billion euros into the ailing group, more than double the current market value. According to the portal, the government, as a new shareholder, would receive a blocking minority and one or two supervisory board mandates at Lufthansa.
However, the share price gave up the gains during the course of the day and at times even slipped into negative territory. Instead of entering the state directly, Lufthansa is also examining insolvency under its own administration, a company spokesman confirmed. This so-called protective shield procedure could become an alternative if the group was threatened with uncompetitive conditions, for example by high interest rates on loans, if the group entered the state.
The holiday airline Condor has already gone through such a procedure. In this case, the company would be placed under the supervision of an administrator and could start the restructuring under the previous management. It is possible to get rid of numerous obligations towards suppliers and other creditors. Pension burdens and unfavourable collective agreements would also be available.
However, the time is pressing for the Group to get into such a procedure with a large assets at all. Currently, Lufthansa airlines only fly around 1 percent of the usual program due to the Corona restrictions. Despite massive short-time working, many fixed costs continue to run, so that the company loses around one million euros in cash every hour and the cash reserves of more than 4 billion euros melt. Among other things, interest rates and unfavourable kerosene contracts, which had assumed a much higher oil price than the current one, are onerous.
Lufthansa CEO Carsten Spohr warned in an interview with the weekly newspaper Die Zeit that his company was under too much state influence. It would be very difficult to control a group if several governments wanted to influence operational business tasks. Air transport has always been political, but it should never become a politically prescribed question “whether we fly from Munich or Zurich to Osaka,” said the CEO.
Spohr sought confidence in the decisions of his management. Lufthansa has had the three best years in its corporate history. “If it is to continue to be successful in the future, it must continue to be able to shape its destiny in an entrepreneurial manner.” The manager received support before the shareholders’ association DSW. Lufthansa needs capital, but no political influence, said its chief executive Marc Tüngler.
According to the cabin union Ufo, Spohr allegedly stated in an internal employee forum that he would rather lead the company into insolvency in the form of a protective shield procedure than let himself be talked about by the politicians. This was seen as a threat. A company spokesman denied that such a statement was made.
Ufo hopes that a direct state entry into Lufthansa will provide better protection of workers’ rights and strategic advantages for German air transport. In a concept paper, it questions, among other things, intra-German air connections and calls for greater coordination with other European airlines.
Last week, Lufthansa reported its first operating quarterly loss of 1.2 billion euros and announced even higher sums for the current months. You can no longer save yourself on your own. His team has prepared Spohr for tough times after billions in profits in the past. After the crisis, Lufthansa is expected to have a fleet of 100 aircraft smaller. This results in a mathematical overhang of 10 000 employees.