Germany to participate in Lufthansa’s capital increase?

Germany is reportedly aiming to participate in Lufthansa’s (LHAB) (LHA) capital increase, which would ensure the refinancing of its previously received bailout package from the government.

According to people familiar with the matter, quoted by Bloomberg on June 2, 2021, the German government might be taking part in Lufthansa’s (LHAB) (LHA) planned €3 billion ($3.7 billion) capital increase to ensure the refinancing of its previously received €9 billion ($11 billion) bailout package.

The new funding will provide enough cash to repay most of a €5.5 billion silent participation still held by the German government. However, the government’s help in Lufthansa’s (LHAB) (LHA) pending capital increase would reportedly let the government limit dilution of its 20% stake in the airline and increase the airline’s chances to raise capital. 

At the height of the COVID-19 pandemic, the largest German air carrier agreed with the government on a bailout deal. The German government provided Lufthansa (LHAB) (LHA) with a €9 billion ($11 billion) bailout sum for an exchange of a 20% stake in the airline. 

In the first quarter of 2021, Lufthansa (LHAB) (LHA) suffered a net loss of €1 billion ($1.2 billion) as the COVID-19 pandemic kept the international air travel demand low. 

 

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