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Lufthansa may raise billions to repay German bailout

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Telegraph reporters
·2-min read
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Lufthansa planes
Lufthansa planes

Lufthansa could raise €5.5bn (£4.7bn) from shareholders to let it repay a big chunk of its German government bailout.

The fresh capital may be used to replace a so-called silent participation that was part of the airline's €9bn funding package from Berlin.

Interest rates on the silent participation are due to rise and Lufthansa might be able to get a more competitive rate through a capital raise, the company said in slides accompanying the announcement.

It has not yet made a final decision on whether to proceed with the fundraising.

Lufthansa shareholders would vote on the matter at the annual meeting on May 5. A simple majority would be enough to pass the motion.

Shares fell as much as 3.5pc in Frankfurt following the announcement.

Alitalia planes at Rome's Fiumicino airport
Alitalia planes at Rome's Fiumicino airport

Meanwhile, Alitalia is running out of cash just as negotiations with the European Union to create a new national carrier grind to a halt.

The bankrupt Italian carrier, which has been in administration since 2017, paid its 11,000 workers only half their March salaries.

The pandemic dealt the final blow to the loss-making airline that for years has been kept afloat by more than €5bn of public money.

Rome's plan to create a new, smaller carrier from the ashes of Alitalia has run into opposition from the EU, which demands a clear separation between the assets and staff of the bankrupt airline and its replacement, to be called ITA.

The EU’s competition chief, Margrethe Vestager, insists that the new company pay market rates for Alitalia’s name and valuable takeoff and landing slots at Milan’s Linate airport, according to Italian media.

The Italian government is ready to inject €3bn into the new company, but that sum and previous funding risk being deemed illegal state aid.

Economic development minister Giancarlo Giorgetti said a new strategy was needed “in light of the stalemate in the negotiations with the EU" after meeting Alitalia administrators this week.