LHA.DE - Deutsche Lufthansa AG
| Previous close | 8.95 |
| Open | 9.09 |
| Bid | 9.10 x 948200 |
| Ask | 9.11 x 1900800 |
| Day's range | 8.97 - 9.14 |
| 52-week range | 7.02 - 17.95 |
| Volume | 4,538,920 |
| Avg. volume | 11,231,669 |
| Market cap | 4.344B |
| Beta (5Y monthly) | 1.21 |
| PE ratio (TTM) | N/A |
| EPS (TTM) | -1.19 |
| Earnings date | 06 Aug 2020 |
| Forward dividend & yield | N/A (N/A) |
| Ex-dividend date | 08 May 2019 |
| 1y target est | N/A |
BloombergFlag Carriers Will Still Struggle to Compete With Low Cost Carriers: McMahon
Jun.29 -- Goodbody Stockbrockers Aviation Analyst Nuala McMahon spoke about the challenges ahead for flag carrier airlines, such as Lufthansa, without the cost base to compete with low-cost carriers such as easyJet. She spoke to "Bloomberg Markets: European Open," on June 25th, ahead of Lufthansa's Extraordinary General Meeting, where shareholders approved a bailout package from the German government to keep the airline afloat.
- Yahoo Finance UK
Coronavirus: Airbus expects 40% drop in production over next two years
European aircraft manufacturer says impact of coronavirus would be felt for years.
- Skift
Google Is Providing Search Data to Air France, Lufthansa, Other Airlines Looking to Decide Which Routes to Restart
Google is rolling out a new tool that provides airline partners with search data that carriers are using to help decide which routes to restart and when. Unlike existing data from Google for airlines about their own performance across Google products, the newly provided data provides a market-wide view of consumer intent based on flight […]
- Reuters
Germany opens part of bailout fund to Lufthansa now - Der Spiegel
The German government is making part of its 9 billion euro (£8.2 billion) bailout fund available to Lufthansa immediately after shareholders backed the rescue plan on Thursday, Der Spiegel magazine reported on Friday. Without citing its sources, the magazine said the economy ministry had agreed with state-backed bank KfW that a 3 billion euro loan can be tapped immediately. A Lufthansa spokesman said the money from the KfW credit should flow as soon as possible.
- Yahoo Finance UK
What to watch: Aston Martin raises cash, Intu faces collapse, and easyJet's sale-and-leaseback deal
A daily overview of the top business, market, and economic stories to watch in the UK, Europe, and abroad.
- Bloomberg
Lufthansa Dodges Insolvency After Shareholders Back Bailout
(Bloomberg) -- Deutsche Lufthansa AG avoided the looming risk of insolvency after shareholders approved a 9 billion-euro ($10 billion) bailout from the German government, securing the survival of Europe’s largest airline after weeks of drama over the rescue package.Fighting for survival after the coronavirus pandemic punctured a decades-long aviation boom, Lufthansa last month reached a deal with the German government for a package of loans and credit guarantees.The bailout, which features the sale of a heavily discounted 20% stake to Chancellor Angela Merkel’s government, hung in the balance until Lufthansa’s biggest shareholder, billionaire Heinz Hermann Thiele, publicly backed it hours before the crunch vote.The approval came just ahead of news Air France-KLM received 3.4 billion euros in aid from the Netherlands, adding to a 7 billion-euro package the group received from France last month.Lufthansa shares swung between gains and losses in pre-market trading on Tradegate. Lufthansa shares rose 7.1% to 9.59 euros on Thursday, paring its decline for the year to 42% and valuing the company at 4.6 billion euros. Lufthansa plans to execute the sale of shares to Germany for 2.56 euros apiece, nearly one fourth the current market price, in the coming days to unlock the financing. The airline warned that insolvency threatened soon if the package wasn’t cleared by shareholders.Another step forward came earlier Thursday, when European Union regulators approved the bulk of the package in exchange for Lufthansa making some slots available at its Frankfurt and Munich hubs.Profit MotiveThe successful shareholder vote not only hands Lufthansa a lifeline but also saves Merkel’s government from a damaging defeat as it seeks to revive the country’s export-led economy.In the process, Germany reasserted itself into the heart of a company that was privatized with fanfare two decades ago and links firms like Siemens AG and Volkswagen AG with markets around the world.“This is very, very good news for the company, the employees and German business,” said Finance Minister Olaf Scholz, a key figure in negotiating the bailout. “Our engagement is temporary. When the company is fit again, the state will sell its stake -- hopefully with a small profit.”The approval of the German package opens the door for further aid already promised by Austria and Switzerland for operations in those countries. Belgium is also discussing funding.Even with the state aid, Lufthansa will need deep restructuring to recover from the pandemic, which all but halted travel around the world. Chief Executive Officer Carsten Spohr has predicted that the airline will face years of depressed demand. The company expects its fleet to be 100 aircraft smaller after the crisis, implying the loss of over 10,000 jobs.Securing the bailout allows Lufthansa’s management to turn attention to negotiating concessions with the company’s powerful labor unions.The company reached a deal late Wednesday with cabin crew that would save around 500 million euros through 2023. In return, Lufthansa pledged not to make redundancies for the duration of the coronavirus crisis. A similar deal with pilots is close, Spohr said at the meeting.The bailout offers the chance for the airline to rebuild its business, and “we can do it,” Kley said.(Updates with new lede, KLM line)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Reuters
Lufthansa investors back $10 billion German government rescue
Lufthansa shareholders on Thursday backed a 9 billion euro ($10 billion) government bailout, securing the future of Germany's flagship airline after it was brought to the brink of collapse by the COVID-19 pandemic. The plan, backed by 98% of the shareholder capital that cast a vote at the online meeting, will see Berlin take a 20% stake in Lufthansa and two board seats. Shares in the company, which employs around 138,000 people, closed 7.1% higher, having risen strongly earlier after top shareholder Heinz Hermann Thiele dropped objections to the deal.
- Bloomberg
European Stocks Climb Led by Cyclicals on New ECB Facility
(Bloomberg) -- European stocks climbed, with cyclicals in the lead after the European Central Bank said it’s setting up a new liquidity facility for central banks outside the euro area.The Stoxx Europe 600 Index rose 0.7% at the close of trading. Carmakers, financial services and banks led gains, while travel shares were the worst performers. The benchmark was down 1.3% earlier on worries about rising coronavirus cases in countries including the U.S. and Australia.Deutsche Lufthansa AG jumped 7.1% after the airline’s biggest stockholder said he’d vote in favor of a 9 billion-euro ($10 billion) government bailout. Wirecard AG slumped 71% after filing for insolvency following an accounting scandal. The stock hasn’t gone to zero due to technical reasons, but the equity is “worthless,” Mirabaud Securities analyst Neil Campling said.Stocks are on a bumpy path after surging to a three-month high in early June, as optimism about stimulus measures and economic recovery war with concern about rising coronavirus cases. The International Monetary Fund has projected a deeper recession and slower recovery for the global economy than it anticipated two months ago.“If market flicks a switch from risk-off to risk-on on an ECB headline then what does that tell one? The bears have a very weak hand and staying power and the fear of missing out is ever present, real and growing as economies open,” said Manish Singh, chief investment officer at Crossbridge Capital. “Europe is in much better state on dealing with Covid, and summer spending by consumers is about to start.”The ECB said its new facility will “provide precautionary euro repo lines to central banks outside the euro area” in response to the fallout from the coronavirus pandemic. In addition, Germany’s constitutional court rejected a separate challenge against the ECB’s 2015 Expanded Asset Purchase Program as inadmissible.Among other notable movers, German chemicals giant Bayer AG dropped 2.9% after initially gaining upon reaching a long-awaited settlement for multiple lawsuits. The deal still leaves open the potential for more litigation.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Reuters
Ryanair complains to EU antitrust watchdog about alleged Lufthansa price-fixing
Ryanair has filed a complaint to EU antitrust regulators about alleged talks between Lufthansa's Italian unit Air Dolomiti and three Italian airlines to fix prices, the chief legal officer of Europe's biggest budget airline said on Thursday. The complaint also cites alleged price fixing in Austria involving Lufthansa's local unit Austrian Airlines. "I can confirm that the price fixing cartel complaint was filed with the European Commission," Ryanair's Juliusz Gomorek told reporters.
- Bloomberg
Lufthansa’s Biggest Investor to Back Government Bailout Deal
(Bloomberg) -- Deutsche Lufthansa AG’s biggest stockholder publicly backed a 9 billion-euro ($10 billion) government bailout, giving the rescue plan a major shot of momentum and boosting the airline’s shares and bonds just before a crunch vote.With Heinz Hermann Thiele declaring support after days of frenzied speculation about his intentions, the state rescue appears likely to secure the two-thirds backing required at Thursday’s special shareholders meeting. The German billionaire who had earlier criticized the conditions held the votes to single-handedly stop the deal and plunge Europe’s largest airline into turmoil.A failure of the landmark bailout, which featured the state buying a heavily discounted 20% stake in the airline, would also have been a serious blow to Chancellor Angela Merkel’s efforts to take a more activist approach to managing Germany’s economy.Thiele eased those concerns by saying he “will vote in favor” of the plan at the meeting, according to an interview with Frankfurter Allgemeine Zeitung published on its website late Wednesday.Because only 39.3% of shareholders registered for the online meeting, Thiele’s 15.5% stake translates into about 40% of the votes. Lufthansa needs to win about half of the rest for the share sale to pass. It’s only part of the larger bailout package that also includes state loans and a so-called silent participation.Approval of the deal would bring the curtain down on weeks of high-stakes drama that buffeted Lufthansa’s stock and bonds and forced it to examine insolvency. It would also thrust the state back into the heart of a company that was privatized with fanfare two decades ago.Lufthansa shares jumped as much as 21% Thursday in early Frankfurt trading, the biggest intraday rise since March 13. They were up 9.9% at 9.85 euros at 4:03 p.m., valuing the company at 4.7 billion euros.The news of Thiele’s support also triggered a sharp rally in Lufthansa debt, with the company’s euro bonds maturing in 2024 jumping the most on record to trade as high as 90.2 cents on the euro. The airline’s bonds have been under pressure since March and a sell-off accelerated last month when the company lost its investment-grade rating at S&P.“We can’t make it through this year on our own,” Chief Executive Officer Carsten Spohr said, referring to the company’s dwindling cash reserves. “We have prepared for insolvency if it’s required” but want to do everything possible to avoid that scenario.The company will need deep restructuring to recover, but the rescue offers the opportunity to renew its fleet and rebuild to recover from the fallout from the pandemic.The financing needs were brought into focus, with the airline facing 1 billion euros in requests to reimburse unused flight tickets that the company plans to pay out over the next two months, the airline said during the meeting.Lufthansa will address shareholders’ questions in a process could take several hours before the vote proceeds and the results are released later in the afternoon.In another step forward the deal, Lufthansa on Thursday won European Union approval for a 6 billion-euro recapitalization plan, the bulk of the financing in the rescue plan. To ease competition concerns, the airline has committed to make slots available at its Frankfurt and Munich hubs.Securing a state holding would be a victory for Finance Minister Olaf Scholz, pleasing his Social Democratic allies and bolstering his ambitions to run for chancellor next year. Economy Minister Peter Altmaier would notch a landmark deal that’s meant to serve as a model for the government’s plan to act more as a state capitalist.‘Lesser Evil’Andreas Laemmel, a member of the Bundestag’s economy and energy committee for Chancellor Angela Merkel’s bloc, said the negotiations with Lufthansa had served as a “learning process” for the government which will inform talks on possible future bailouts for other companies.“The aid package will protect the value of the shares and help the company be successful again,” Laemmel said Thursday in an interview with Deutschlandfunk radio. “That’s the best contribution that the government can make, giving shareholders security.”Read more:One Man Can Save Lufthansa’s Bailout or Unleash BedlamLufthansa Closes German Charter Carrier With Loss of 1,200 JobsGermany Dares Lufthansa’s Top Shareholder to Scuttle BailoutLufthansa’s Fate Will Affect German Savers Holding Its DebtUnions, many investors and proxy advisory firms recommend shareholders back the deal. While stockholders will see their holdings diluted, it’s not clear what the rationale for blocking the package would be without a major investor proposing an alternative.“A government-orchestrated bailout is better than insolvency,” said Patrick Schuchter of Union Investment, holder of a 0.12% stake. He plans to vote for the rescue, despite the drawbacks for shareholders. “Investors need to choose the lesser evil or sell their shares.”Securing the bailout would allow Lufthansa’s management to turn attention to negotiating restructuring packages with the company’s powerful labor unions. The airline late Wednesday reached a deal with its cabin crew union that would save around 500 million euros through 2023. In return, Lufthansa pledged not to make redundancies for the duration of the coronavirus crisis.Spohr said that the company is nearing a similar deal with pilots.Chairman Karl-Ludwig Kley called the shareholders meeting “historic” and on par with the company’s foundation. He said the government bailout offers the chance to rebuild its business, saying: “We can do it.”(Updates with additional company comments)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Reuters
Germany welcomes EU green light for Lufthansa bailout
Germany's economy and finance ministers on Thursday welcomed the approval by the European Union for a government bailout package for Lufthansa and urged shareholders to approve the deal at a meeting later in the day. "This concerns more than a hundred thousand jobs and Germany's position in world markets," Economy Minister Peter Almaier said.
- Reuters
EU regulators okay with conditions Lufthansa's six billion euro recapitalisation
EU state aid regulators approved on Thursday German carrier Lufthansa's <LHAG.DE> 6-billion-euro (£5.4 billion) recapitalisation subject to a ban on dividends, share buybacks and some acquisitions until the state support is paid back. The European Commission said Germany also submitted a business plan to redeem by 2026 both the loan as well as the recapitalisation instruments, and pledged to work out an exit strategy within 12 months after the aid is granted, unless the state stake is reduced below 25% of equity by then. Germany will also have to come up with a restructuring plan for Lufthansa if it has not sold off its stake six years after granting the recapitalisation aid.
BloombergLufthansa’s Top Investor Backs $10 Billion Bailout Ahead of Vote
Jun.25 -- Deutsche Lufthansa AG’s biggest shareholder, billionaire Heinz Hermann Thiele, said he would support a $10 billion government bailout plan. Bloomberg’s Benedikt Kammel reports on "Bloomberg Markets: European Open."
- Reuters
Lufthansa soars after top shareholder backs bailout
Lufthansa <LHAG.DE> shares jumped as much as 20% on Thursday after its top shareholder dropped his objections to a 9 billion euro (£8 billion) government bailout for the German airline brought to the brink of collapse by the COVID-19 pandemic. "I will vote for the proposal," billionaire investor Heinz Hermann Thiele, who recently increased his stake in Lufthansa to 15.5%, told the Frankfurter Allgemeine daily on Wednesday. Thiele's backing will come as a relief to Chancellor Angela Merkel, who could ill afford another high-profile business collapse following the failure of payments firm Wirecard.
- Reuters
Lufthansa shareholder Thiele to endorse bailout - FAZ
Lufthansa's <LHAG.DE> chances of winning approval for a 9 billion euros (8.16 billion pounds) government bailout improved on Wednesday after billionaire Heinz Hermann Thiele, who owns a 15.5% stake, told Frankfurter Allgemeine Zeitung he would endorse the rescue. "I will vote for the proposal," the paper late on Wednesday quoted Thiele, who owns a 15.5% stake in Lufthansa, as saying. Lufthansa declined to comment.
- Reuters
Exclusive: Lufthansa draws up 'Plan B' to avoid insolvency - source
Lufthansa has drawn up a plan to avoid insolvency should a shareholder vote on Thursday fail to approve a $10 billion government bailout, a company source told Reuters on Wednesday. The German government could still get a 20% stake, as originally envisaged. Germany's flagship airline has been hit hard by the COVID-19 pandemic and what promises to be a protracted travel slump, and has sought a state rescue to avoid insolvency.
- Reuters
Lufthansa says it has not yet reached agreement with unions on crisis package
Lufthansa has not yet reached an agreement with unions on a package to cut staff costs, it said on Tuesday, adding to the pressure on the German airline before a crunch shareholder vote on a 9 billion euro bailout plan to be held on Thursday. Germany's flagship carrier, hit hard by the coronavirus-induced travel slump, said talks with pilot union VC and cabin crew union UFO would continue ahead of the meeting in an effort to secure an agreement and pave the way for the state to take a 20% stake in the airline. The bailout is also being complicated by shareholder Heinz Thiele, who owns a 15.5% stake and says the state, which would take two seats on the supervisory board, would have too much power.
- Bloomberg
European Stocks Retreat After Week of Gains on Fresh Virus Woes
(Bloomberg) -- European equities dropped at the start of the week on concerns about the spreading of new coronavirus infections.The Stoxx Europe 600 Index fell 0.8% as telecoms, food and oil sectors retreated. Carnival Plc tumbled 10% after major cruise lines agreed to suspend voyages from U.S. ports until Sept. 15. Wirecard AG lost 44% after saying the missing 1.9 billion euros ($2.1 billion) of cash on its balance sheet probably doesn’t exist. Deutsche Lufthansa AG fell 3.2% after the company said its bailout plan is at risk.European equities rallied last week on the optimism of strong stimulus measures and as China’s Beijing Covid-19 outbreak appeared to fade. However, concerns persist about a possible second wave of coronavirus infections, with California reporting record new cases and Florida infections jumping more than the weekly average. Germany’s infection rate rose for a third day with outbreaks at a meat plant and housing complexes adding to the tally“With the upcoming reporting season, continuing geopolitical and trade uncertainties, the ongoing corona crisis and the U.S. presidential election due in early November, there are a lot of stumbling blocks ahead,” said Ulrich Urbahn, head of multi-asset strategy and research at Joh Berenberg Goss. “At the same time, the market is supported by the fact that many bears remain underinvested in equities, in addition to the support from central banks.”Berenberg’s multi-asset team slightly reduced its overweight in equities at the start of June and has hedges in gold and U.S. Treasuries.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Germany Dares Lufthansa’s Billionaire Top Shareholder to Scuttle Bailout
(Bloomberg) -- Germany stood by its 9 billion-euro ($10 billion) bailout plan for Deutsche Lufthansa AG, daring the airline’s disgruntled top shareholder to shoot it down at a pivotal vote this week.With Lufthansa fighting for survival after the coronavirus outbreak punctured a decades-long global travel boom, billionaire Heinz-Hermann Thiele is threatening to block the rescue plan -- which would dilute his 15.5% holding and influence -- at a shareholder meeting scheduled for Thursday.But with the government signaling it’s unwilling to alter the package, the onus is on the 79-year-old investor to decide whether to support a deal he considers faulty or potentially trigger its rejection. The alternative would lead Lufthansa into uncharted waters, forced to reconfigure its survival plan with cash reserves running low and the threat of insolvency looming.The government stands firm on the agreed package, which will be the basis for the shareholder vote, German economy ministry spokesman Korbinian Wagner said Monday. The German government explained the terms of the rescue to Thiele in a meeting attended by Lufthansa Chief Executive Officer Carsten Spohr and the two ministers who brokered the bailout, according to a state official. The parties didn’t discuss what would happen if the package wasn’t approved by shareholders, the official said.German Finance Minister Olaf Scholz said the government had a “friendly” discussion with Thiele and Lufthansa, adding the deal is “good and balanced”.Lufthansa shares traded 3.2% lower at the close in Frankfurt, after tumbling as much as 9% earlier in the day. Its bonds sank to three-month low earlier Monday.“We face a fateful week for our Lufthansa,” Spohr said Sunday in a letter to employees seen by Bloomberg, warning that it’s not at all certain the bailout package will gain approval at the extraordinary general meeting.The carrier’s chances of securing backing for the proposal suffered a blow after only 38% of shareholders registered to vote by a deadline over the weekend.That means Lufthansa’s management must secure two-thirds of votes to win the day, rather than a simple majority. That also means Thiele effectively has a blocking minority, assuming he registered, which the airline declined to confirm.Germany’s third-richest man has expressed dissatisfaction with the rescue, saying the state is profiteering.State StakeTerms of the package of loans and equity investment call for Lufthansa to issue a 20% stake to the government in Berlin at the nominal price of 2.56 euros per share, a change that needs to be approved at the online EGM.“The federal government should confine itself to the financial aid packages, which are fundamentally very positive, and should not grow into the role of a return-oriented investor,” Thiele told the Frankfurter Allgemeine Zeitung newspaper last week.It was unlikely that the government would give ground before the vote, as Scholz articulated earlier, having rejected other scenarios as unacceptable or impossible to deliver in time to meet Lufthansa’s cash requirements, one of the people said.Analysts at Citibank Inc. see three scenarios for Lufthansa this week.One would see the vote pass with Thiele’s support. The second envisages a failure of the deal, with the government then withdrawing its offer of a 20% stake, a relatively minor part of the deal in terms of the cash it would give to the carrier. The third scenario would see Thiele scupper the deal and then expand his holding as the share price fell.Lufthansa on Monday fell out of Germany’s bluechip DAX index after its 40% share-price decline this year. The decision to remove the airline was taken by Deutsche Boerse earlier this month.Monday also marks Lufthansa’s self-imposed deadline for an agreement with unions on as many as 22,000 job cuts, though the sides may agree to a limited cost-reduction package to buy time as talks continue.The group’s board is separately due to meet with Brussels Airlines, having threatened to put the unit into bankruptcy or up for sale if it fails to secure a bailout from Belgium to match rescues by the Swiss and Austrian governments. It wasn’t clear if the meeting would go ahead given the circumstances.‘Balanced Offer’Whether Thiele, a former army tank commander, is prepared to put his 750 million-euro stake at risk isn’t clear. Economy Minister Peter Altmaier has said previously that the airline will be saved at any cost -- perhaps giving the investor hope that Germany would ultimately revisit the basis of the bailout if left with no other choice.Spohr said in his letter that Lufthansa is preparing for all scenarios, including ways to avoid grounding its jets and continuing communications with the German government should the vote be lost.“The aim of the board, obviously, is to avoid an insolvency and all the consequences that would bring,” he said.(Updates with share price in sixth paragraph, adds Scholz comment)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Lufthansa’s Fate Will Affect Thousands of German Savers Holding Its Debt
(Bloomberg) -- The outcome of a proposed bailout of flag carrier Deutsche Lufthansa AG that’s meeting resistance from its largest shareholder, will impact the savings of thousands of German investors who hold its debt.The troubled airline has more than 3.7 billion euros ($4.2 billion) in outstanding bonds, loans and Schuldschein debt mostly held by German savings banks, insurers, commercial lenders and investment funds, according to data compiled by Bloomberg.The company’s 500 million euros of bonds that mature in 2024 have fallen to three-month lows as investors take fright at the company’s battle for survival.Read More: Lufthansa Braces for Portentous Week With Future on the LineSchuldschein, a kind of promissory note common in German capital markets, accounts for more than 1.5 billion euros the company’s outstanding debt, a Lufthansa spokesman confirmed in an email. Lufthansa is one of the biggest users of the Schuldschein market, having sold 800 million euros in a single transaction last year and 1.2 billion euros in 2016. The earlier issue was partly paid off in 2017.Debt IssuesLufthansa also carried out smaller issues of Schuldschein, such as a 150 million-euro deal in February -- just before the coronavirus pandemic triggered a collapse in air travel. The company planned to arrange a further 200 million-euro issue in early March but put that deal on ice because of volatile capital markets, according to the spokesman.Schuldschein holders typically sit on their commitments and there are seldom any trades or secondary sales in the private market unless companies run into problems.Table below shows Lufthansa’s most recent fund-raising in bank market.Lufthansa’s Most Recent Debt TransactionsFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Reuters
Germany in Lufthansa bailout talks with key shareholder
The German government held talks with Lufthansa's biggest shareholder on Monday to persuade him to accept the terms of a 9 billion euro ($10 billion) coronavirus bailout that it has offered the airline group. Finance Minister Olaf Scholz voiced confidence that investors would approve the deal after he met Heinz Thiele, who owns 15.5% of the group and had threatened to block the aid at a shareholder meeting on Thursday. Scholz said the proposal to be put to shareholders had been "carefully weighed" in negotiations with Lufthansa and the EU, adding: "This will be taken into account, I think, by the shareholders."
- Bloomberg
Lufthansa Braces for Portentous Week With Future on the Line
(Bloomberg) -- Deutsche Lufthansa AG faces one of the most momentous weeks in a near 70-year history, with a clash between its biggest investor and the German government threatening to scupper a 9 billion-euro ($10 billion) bailout and push Europe’s biggest airline toward collapse.With Lufthansa fighting for survival after the coronavirus outbreak punctured a decades-long global travel boom, billionaire Heinz-Hermann Thiele is threatening to block the rescue plan -- which would dilute his holding and influence -- at a virtual shareholder meeting Thursday.Thiele is set to make his case to Lufthansa Chief Executive Officer Carsten Spohr and the two German ministers who brokered the bailout in an online meeting Monday, according to people familiar with the situation. If there’s no breakthrough, the airline will go into the investor vote with its future on the line as cash reserves run low and the threat of insolvency looms.Lufthansa shares fell as much as 8.8% and were trading 7.8% lower as of 9:08 a.m. in Frankfurt. The stock has fallen 42% since the start of the year.“We face a fateful week for our Lufthansa,” Spohr said Sunday in a letter to employees seen by Bloomberg, warning that it’s not at all certain the bailout package will gain approval at the extraordinary general meeting.The carrier’s chances of securing backing for the proposal suffered a blow after only 38% of shareholders registered to vote by a deadline over the weekend.That means Lufthansa’s management must secure two-thirds of votes to win the day, rather than a simple majority. With a 15% holding, Thiele, a former army tank commander, effectively has a blocking minority, assuming he registered, which the airline declined to confirm.Germany’s third-richest man has expressed dissatisfaction with the rescue, saying the state is profiteering, and is expected to press Finance Minister Olaf Scholz and Economy Minister Peter Altmaier for last-minute changes, according to the people, who asked not to be named discussing a private meeting.State StakeTerms of the package of loans and equity investment call for Lufthansa to issue a 20% stake to the government in Berlin at the nominal price of 2.56 euros per share, a change that needs to be approved at the online EGM.“The federal government should confine itself to the financial aid packages, which are fundamentally very positive, and should not grow into the role of a return-oriented investor,” Thiele, 79, told the Frankfurter Allgemeine Zeitung newspaper last week.It’s unlikely that the government will give ground before the vote, as Scholz has articulated before, having rejected other scenarios as unacceptable or impossible to deliver in time to meet Lufthansa’s cash requirements, one of the people said.Analysts at Citibank Inc. see three scenarios for Lufthansa this week.One would see the vote pass with Thiele’s support. The second envisages a failure of the deal, with the government then withdrawing its offer of a 20% stake, a relatively minor part of the deal in terms of the cash it would give to the carrier. The third scenario would see Thiele scupper the deal and then expand his holding as the share price fell.Lufthansa on Monday fell out of Germany’s bluechip DAX index after its share-price decline this year. The decision to remove the airline was taken by Deutsche Boerse earlier this month.Monday also marks Lufthansa’s self-imposed deadline for an agreement with unions on as many as 22,000 job cuts, though the sides may agree to a limited cost-reduction package to buy time as talks continue.The group’s board is separately due to meet with Brussels Airlines, having threatened to put the unit into bankruptcy or up for sale if it fails to secure a bailout from Belgium to match rescues for Swiss and Austrian divisions. It’s not clear if the meeting will go ahead given the current circumstances.‘Balanced Offer’Korbinian Wagner, a spokesman for the German economy ministry, said on Sunday that the government “has presented a good and balanced offer to which the supervisory board has agreed.”Whether Thiele will be prepared to put his 750 million-euro stake at risk isn’t clear, though Altmaier has said previously that the airline will be saved at any cost -- perhaps giving the investor hope that Germany would ultimately revisit the basis of the bailout if left with no other choice.Spohr said in his letter that Lufthansa is preparing for all scenarios, including ways to avoid grounding its jets and continuing communications with the German government should the vote be lost.“The aim of the board, obviously, is to avoid an insolvency and all the consequences that would bring,” he said.(Updates with share move in fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Final Virgin Australia Bids a Key Test for Ailing Airlines
(Bloomberg) -- The final bids for Virgin Australia Holdings Ltd. will show how much appetite private investors really have for an airline industry that’s been battered by the coronavirus pandemic.Private equity firms Bain Capital LP and Cyrus Capital Partners LP made final and binding offers for the airline on Monday, administrator Deloitte said in a statement. The Australian carrier collapsed in April under A$6.8 billion ($4.7 billion) of debt after the government declined to step in.Deloitte, which aims to secure a deal by the end of June, didn’t disclose the value of either proposal. It received interest in the airline from more than 20 suitors before most of them fell away.The auction of the second-largest airline in Australia, a market dominated by Qantas Airways Ltd., is a key moment for an industry facing more than $84 billion of losses worldwide this year because of Covid-19 and related travel restrictions. Until now, carriers have been kept on life support largely with state-backed loans and bailouts of at least $123 billion.Whoever wins the bid, Virgin Australia’s prospects are uncertain and business travel likely will be curtailed for years, said Warren Staples, a senior lecturer in management at RMIT University in Melbourne.“There might be a gap between what they pitch and the reality of what happens,” Staples said.Deloitte said Cyrus and Bain envisaged operating a “smaller, single-branded domestic and short-haul international airline that also has growth potential.” Both bidders have received approval from Australia’s Foreign Investment Review Board, Deloitte said.Spokespeople for Cyrus and Bain declined to comment before Deloitte’s statement on Monday.Cyrus promised to keep the airline’s headquarters in Queensland, according to people familiar with the matter who declined to be identified because details of the bid haven’t been made public. That pledge followed lobbying by Australian states including New South Wales and Victoria for prospective buyers to relocate the business, which had about 10,000 workers before the pandemic struck.Virgin Australia lost money for seven consecutive years before it finally succumbed to a near-halt in revenue. New Managing Director Paul Scurrah’s plan to cut costs, simplify the fleet and lighten the debt burden was quickly overwhelmed by the outbreak. The government ultimately refused to give the airline even A$200 million to survive, so it joined U.K. carrier FlyBe as one of the corporate casualties of the virus.State AidIn Europe, Air France-KLM and Deutsche Lufthansa AG are among airlines that have accessed a mixture of loans and state aid, while major U.S. carriers have received billions of dollars in government assistance. In Hong Kong, Cathay Pacific Airways Ltd. this month announced a $5 billion rescue plan backed by the government.“It has potentially been a space in which state money has been more effective,” Staples said.A revival of domestic flights in the past month in key markets, including the U.S. and China, has encouraged investors. Qantas is reinstating some local services, and Australia and New Zealand -- which largely have suppressed their outbreaks -- are working on a trans-Tasman travel corridor.The early positive signs have propelled the Bloomberg World Airlines Index to a 28% increase from a May 15 low.Conditions are far from rosy, though. Australia’s tourism and trade minister, Simon Birmingham, said the country’s borders could remain closed to general tourism-related travel until 2021 as part of a strict containment strategy. Qantas has canceled most international flights until late October, and the pace of infections worldwide shows no sign of slowing.World Girds for Long, Hard Road Back After 450,000 Virus DeathsA buyout of Virgin Australia would represent a long-term bet on a sustainable recovery.Cyrus and Bain have courted Virgin Australia’s almost 10,000-strong workforce -- a key block of voting creditors -- through local media in recent days. Bain said its cuts to Virgin won’t be any deeper than Cyrus’, the Sydney Morning Herald reported. Some unions have backed Cyrus for its history of aviation investment beside Richard Branson’s Virgin Group, the newspaper said.Virgin Australia earlier attracted interest from Australian buyout firm BGH Capital Pty, Brookfield Asset Management Inc. of Canada and investors Indigo Partners LLC and Oaktree Capital Management LP.(Updates with two final bidders in the second paragraph, Cyrus plans for headquarters in the ninth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Reuters
Lufthansa gears up for bailout showdown with investor
Lufthansa will seek to avoid a grounding and insolvency, Chief Executive Carsten Spohr said on Sunday, before a showdown between the airline's biggest shareholder and the German government over the terms of a 9-billion-euro bailout. Lufthansa has been hard hit by what is expected to be a protracted travel slump because of the COVID-19 pandemic, forcing it to seek a bailout. Billionaire shareholder Heinz Hermann Thiele will meet the economics minister on Monday to discuss his objections to the state-backed bailout, a source close to the matter told Reuters.
- Bloomberg
German Mogul Could Topple Lufthansa’s $10 Billion Bailout
(Bloomberg) -- Deutsche Lufthansa AG and the German government wrangled for weeks before agreeing on a 9 billion-euro ($10 billion) bailout for the cash-strapped airline. Now one man could bring the deal crashing down.Heinz Hermann Thiele, a 79-year-old billionaire, has amassed a stake in the carrier of about 15.5%, making him the largest shareholder. While his intentions are unclear, he has expressed dissatisfaction with the rescue plan, saying equity investors deserve better.The moves put Thiele at the center of Germany’s biggest corporate bailout of the coronavirus era just days before a shareholder vote that the airline has said could fail. Insolvency would be the most likely outcome should investors block the rescue, Lufthansa warned Wednesday. Unions, many investors and proxy advisory firms recommend shareholders back the deal.“A government-orchestrated bailout is better than insolvency,” said Patrick Schuchter of Union Investment, holder of a 0.12% stake. He plans to vote for the rescue, despite the drawbacks for shareholders. “Investors need to choose the lesser evil or sell their shares.”Yet Thiele, a former army tank commander, may have enough ammunition to shoot down the bailout -- should he choose to do so.If less than 50% of shareholders show up to vote at the online meeting on Thursday -- a possibility, given that attendance at the firm’s May AGM was 33% -- Thiele’s holding could be enough to deny Lufthansa’s management board the two-thirds majority it needs.Why he would want to tip the airline into insolvency is less clear, as it would be disastrous for Thiele’s own 750 million-euro stake as well as other investors’ holdings.Further muddying the picture, the mogul appears to be building a war chest. He announced Thursday a plan to sell 8 million shares of Knorr-Bremse AG, the Munich-based brake-maker that underpins his fortune. The move will provide about $850 million in cash as he considers his next move.The proceeds of the sale will be used “to support Mr. Thiele’s other private investments,” his KB Holding GmbH said. A spokeswoman for Thiele declined to comment.Like airlines the world over, Lufthansa is fighting for survival after the coronavirus grounded fleets and punctured a decades-long aviation boom. The company has said it’s losing 1 million euros an hour and would run out of cash in weeks without government aid.Germany this month offered a package of loans and investments to keep the nation’s flag carrier aloft. Even so, the airline has said it may have to shrink its fleet by 100 jets and jettison 22,000 of its 140,000 or so employees.Thiele increased his stake in Lufthansa to 10% in March, and raised it above 15% this month, making it his second-biggest holding in a listed company. His dealings in the airline mark a high-profile move for a media-averse billionaire with modest beginnings.Third RichestHe started at Knorr-Bremse in 1969 as a legal specialist in the patents department, and rose through the ranks before buying the company in 1985. At that point, Thiele hadn’t even repaid the mortgage on his house, he said in an interview with the Frankfurter Allgemeine newspaper.He and his family pocketed around 3 billion euros from the initial public offering of Knorr-Bremse in 2018, and he still owns a majority stake in the manufacturer. All told, he’s the nation’s third-richest individual with a fortune of around $16.7 billion, according to the Bloomberg Billionaires Index.Thiele, who as a panelist at a Bavarian Industry Association event in 2018 called Chancellor Angela Merkel “autocratic,” tends to make investment decisions by himself without consulting advisers, people who have worked with him said.While his approach worked on Knorr-Bremse, it hasn’t always turned out so well. Since he started building a stake in German rail company Vossloh AG in early 2011, the shares have fallen about 59%.He controls his holdings in both firms through his family office, Stella, which hired Linde Group’s former head of pension investments, Christoph Schlegel, around the start of this year as its chief investment officer.Government StakeIn an interview with FAZ, Thiele indicated he’s disgruntled that the Lufthansa bailout favors German taxpayers over the company’s shareholders, and wants the terms altered.Mindful of public anger over banking bailouts in the wake of the financial crisis, Germany’s finance minister, Olaf Scholz, demanded Lufthansa issue a 20% stake to the government at the nominal price of 2.56 euros a share. That’s the piece of the package shareholders will vote on Thursday, and the part that led Thiele to accuse the state of profiteering.“The federal government should confine itself to the financial aid packages, which are fundamentally very positive, and should not grow into the role of a return-oriented investor,” Thiele said in the FAZ interview.Lufthansa and government officials declined to comment. Scholz has said the deal isn’t open for renegotiation.If Thiele sees an opening to unpick a package that took weeks of tortuous negotiations, that could be the fault of Peter Altmaier, Germany’s economy minister, who said publicly in early May that the airline would be saved at any cost. Those remarks raised eyebrows among government negotiators who were trying to convince Lufthansa they had no choice but to accept the terms on offer.Survival TimeThiele’s goal with his Lufthansa stake might be to win publicity, or to show he’s still a great investor, people who have worked with him said. But he’s keeping his cards close to his chest, sparking speculation as to whether he simply intends to push for better terms or do something more dramatic, such as torpedo the deal and replace the government in the bailout, making him the dominant shareholder in one of the country’s most storied firms.Whatever his intentions, he’s causing alarm among investors and other Lufthansa stakeholders, including employees.“I call on all shareholders to register to vote and support this financial lifeline,” said Marcus Wahl, president of the VC pilots’ union. “You’re deciding on the survival of the company and its employees,” said Nicoley Baublies, an official at the UFO cabin crew union.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
