While some airlines were looking towards state aid to increase their liquidity and help them weather the coronavirus storm, Lufthansa (LHAB) (LHA) was quite adamant regarding state aid. So much so, that the German airline group considered entering insolvency proceedings instead of taking a state aid package from the German government.
Carsten Spohr, the chief executive of Lufthansa (LHAB) (LHA) , had stated that if the German government were to gain a stake and a seat on the company’s Supervisory Board, the governments of Austria, Belgium and Switzerland were to follow suit, reported De Zeit.
At Lufthansa’s (LHAB) (LHA) annual shareholders’ meeting on May 5, 2020, Spohr reiterated that the company was hit by the crisis “through no fault of our own,” and that it needed “government support, but we do not need government management.”
“Even in the federal government in Berlin, nobody wants a state-controlled management,” added Spohr.
However, now, the stance might be changing. On May 7, the German aviation conglomerate announced that it is engaged in negotiations with the Federal Economic Stabilization Fund (Wirtschaftsstabilisierungsfonds – WSF) for an aid package of $9.7 billion (€9 billion). While the negotiations are still ongoing, Lufthansa (LHAB) (LHA) highlighted that the WSF could take a 25% plus one share package and is also “seeking representation within the Supervisory Board.”
In addition, to comply with European Union’s Temporary Framework and WSF Act, the company would be forced to withdraw the payment of dividends to its shareholders.
Lufthansa (LHAB) (LHA) still aims to ensure “the future viability of the company for the benefit of its customers and employees,” as negotiations continue.