Lufthansa in advanced talks for $9.9 billion rescue package with state government

On Thursday, German airline Lufthansa stated, it is in advanced talks with the German government’s economic stabilization fund over a rescue deal worth up to $9.9 billion (9 billion euros); the deal potentially includes the German state taking a 20% stake in the company.

The potential deal could involve the government taking two seats on its supervisory board, said the airline while adding that if the deal goes through the German government would only exercise its voting rights in exceptional cases including protection against a takeover.

Lufthansa has been in talks with the government for weeks now over financial aid to help it weather the coronavirus pandemic which it expects to result in a protracted travel slump; it has been wrangling over the extent of control it would lose in return for financial support.

In a statement Lufthansa said, it expected the terms of the deal to include waiver of future dividend payments and limits on management compensation while adding that the package would have to be approved by the European Commission.

The potential deal will include a 3 billion euro loan from state-backed bank KfW and a convertible bond, which can be exchanged for a further 5% stake plus one share in the event of a public takeover offer by a third party.

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