LHA.DE - Deutsche Lufthansa AG
| Previous close | 10.31 |
| Open | 10.25 |
| Bid | 10.90 x 948200 |
| Ask | 10.92 x 1900800 |
| Day's range | 10.12 - 11.10 |
| 52-week range | 7.02 - 18.01 |
| Volume | 19,799,308 |
| Avg. volume | 12,666,093 |
| Market cap | 5.227B |
| Beta (5Y monthly) | 1.22 |
| 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 |
- Bloomberg
Lufthansa to Exit Germany’s DAX Benchmark After 32-Year Stay
(Bloomberg) -- Germany’s flag carrier is being removed from the country’s benchmark stock index for the first time since the gauge’s inception more than three decades ago, after travel restrictions aimed at stemming the coronavirus pandemic sent the stock plunging.Deutsche Lufthansa AG will be replaced by real estate company Deutsche Wohnen AG in the DAX Index, Deutsche Boerse said in a statement Thursday night. The change will come into effect June 22.Shares in Lufthansa, which this week agreed to a 9 billion-euro ($10 billion) state bailout package, rose as much as 7.8% on Friday, paring their loss this year to 34% and giving the airline a market capitalization of about 5.2 billion euros. That makes it the 60th largest German company by market value, while the DAX is reserved for the country’s 30 biggest companies. Deutsche Wohnen rose as much as 3.4%.The first half has been a tumultuous one for the German carrier, with the pandemic all but halting its business. Its massive size -- with operations spanning from catering to maintenance -- meant it has bled cash faster than other airlines. The bailout will inflate Lufthansa’s debt and interest payments, and existing shareholdings will be diluted as the government takes a stake. The company said on Wednesday it will slash employee expenses and look at spinoffs to bolster cash flow.More Pessimism“Implications for Lufthansa’s equity value from the support package, on top of the existing net debt and pension liabilities, are weighing on sentiment,” Goodbody Stockbrokers analyst Nuala McMahon said by email before the announcement. There are also concerns about the corporate-travel market, which accounted for 50% of passenger revenue, and its strategy for leisure travel because of discount competition, she said.More than two-thirds of analysts covering the carrier recommend clients should sell the stock, while the average price target among those tracked by Bloomberg suggests a 34% drop, in contrast to a 7.7% gain expected for British Airways parent IAG SA. Lufthansa’s consensus recommendation -- a measure translating buy, hold and sell ratings into a number -- is also the third-worst for all companies in the Stoxx Europe 600 Index.The pessimism is mirrored by investor bets of a stock drop that are among the harshest in Europe. Short interest in the freely traded stock currently stands at 19%, according to IHS Markit data.Still, not everyone is as negative on the airline’s prospects. “The company appears to be able to exceed our expectations in terms of liquidity preservation,” Bankhaus Metzler analyst Guido Hoymann wrote in a note Thursday, raising his recommendation to hold from sell. While visibility on the recovery of travel is still low, the management measures announced “seem totally plausible,” and capital expenditure will be reduced significantly, he wrote.Here is how share prices of all companies that will be promoted to the country’s main indexes or demoted from them are moving on Friday.The next date for a regular review of the indexes is Sept. 3.(Adds share prices table)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
Millennials Are Happy to Get on Planes Again
(Bloomberg Opinion) -- Europe’s airlines aren’t all made equal. German flag carrier Deutsche Lufthansa AG will receive a 9 billion-euro ($10 billion) bailout and it was obliged to offer only limited concessions to Brussels in return. Meanwhile, low-cost Hungarian rival Wizz Air Holdings Plc has benefited from only limited state support. Goliath gets the goodies, and David the gruel. But anyone paying attention to these two companies’ earnings presentations this week will have concluded that Wizz is much better placed to profit as Covid-19 travel restrictions are lifted. It sounded pretty upbeat about demand and wants to expand its network, as the lumbering debt-laden Lufthansa prepares to shrink. Wizz is one of the few airlines whose shares have risen over the past year.Lufthansa’s core network airlines derive about half of their revenues from business travel, which won’t recover quickly — lots of companies have banned employees from flying. At Wizz, only 7% of customers fly for business and two-thirds are traveling to visit friends and family or work overseas. Those trips didn’t happen while countries were in lockdown, and people are itching to see their loved ones again.Wizz is fortunate that its core central and eastern European markets suffered less severe coronavirus outbreaks than places like the U.K., Spain and Italy. It also has a relatively young customer base: The average Wizz passenger is a sprightly 36 years old. Three-quarters of Lufthansa’s passengers are over 40. While airlines say mask wearing and other hygiene measures will make flying safe for everyone, the young might be willing to risk boarding a plane sooner — they’re less likely to get the worst Covid-19 infections and die. (Millennials aren’t just keen to fly, they’re investing their cash in airlines too.) Happily for Airbus SE, the aircraft manufacturer, Wizz still plans to take delivery of the planes it has ordered and it claims airports are begging it to add routes. It aims to operate about 60% of its planned flights over the busy summer quarter and as much as 80% during the autumn and winter.As with Ireland’s Ryanair Holdings Plc, Wizz’s low costs should help it offer cheap fares to stimulate demand, and it hopes to attract customers with new bases in Milan and Abu Dhabi. Having been quick to cut about a fifth of its staff, Wizz is now consuming less than 100 million euros of cash a month.By contrast, Lufthansa expects to have restored only about 40% of capacity by the autumn. Demand should recover by 2023, but even then it expects 100 of its 760-strong fleet will be surplus. The heavy restructuring required to restore profitability mostly lies ahead still. In the meantime, the German group is burning through about 800 million euros a month of cash, excluding a 2.5 billion-euro ticket refund liability. Without a bailout, Lufthansa would be sunk and it must now devote all of its energies to paying down debt.Naturally, this bifurcation of Europe’s airlines hasn’t gone unnoticed by investors. Wizz’s stock has rallied more than 80% from a March low and it’s higher than it was a year ago. Lufthansa’s shares are deeply negative over the same period. While a big bailout is nice, a handout doesn’t guarantee you a competitive business model.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Lufthansa Plans Far-Reaching Restructuring to Repay Bailout
(Bloomberg) -- Deutsche Lufthansa AG signaled sweeping job cuts and said it plans to sell off assets to help repay a 9 billion-euro ($10 billion) coronavirus bailout from the German government.Europe’s biggest airline will slash employee expenses and look at spin-offs to bolster cash flow as the coronavirus crisis depresses revenue, it said in a statement Wednesday. The group reported a 2.1 billion-euro net loss in the first quarter, fed by fuel-hedging expenses that accounted for almost half the total.“In view of the very slow recovery in demand, we must now take far-reaching restructuring measures to counteract this,” Chief Executive Officer Carsten Spohr said in the release.The pledge to target labor costs is likely to lead to a struggle with Germany’s powerful unions, which prior to the pandemic used pilot and cabin-crew strikes to thwart efforts to trim expenses. While other European carriers are also cutting back, Lufthansa’s situation may be complicated by the state’s pending 20% holding in the airline. The deal will bring government representatives onto its board.Lufthansa shares were up 5.6% as of 4:49 p.m. in Frankfurt. The stock has fallen around 39% since the start of the year.Labor BattleLufthansa wouldn’t be the first German company to run up against labor resistance as it tries to pare costs. Industrial conglomerate Thyssenkrupp AG -- once a symbol for German engineering prowess -- is selling off or closing entire divisions after years of failed attempts to put the business on a sustainable footing. If Spohr’s cost-cutting drive falls short, he won’t be able to pay down debt and dislodge the state as a shareholder.Spohr said that Lufthansa’s eventual job losses could exceed 10,000 as the airline grapples with permanently lower demand for business travel once the crisis lifts. Across Europe and the Middle East, more than 60,000 airline jobs are poised for elimination.“The scale of the restructuring is immense, and agreement with unions on drastic reductions in staff numbers, wages or both will be difficult to achieve,” said Daniel Roeska, an analyst with Sanford C Bernstein.Unit SalesSpohr’s bid to sell non-core units won’t be easy either, judging by Lufthansa’s past spin-off attempts. A push to divest its LSG Sky Chefs catering arm met with repeated delays before an agreement was reached to sell the European division to Gate Group Holding AG. Lufthansa earlier this year abandoned an auction process for the international unit.The airline group has looked at a partial listing of its Lufthansa Technik aircraft maintenance and refit business, people familiar with the matter said previously. While a listing of the unit would give Lufthansa funds to pay down debt, unshackling the division could take years and would deprive the airline group of a reliable income stream. Technik had a pre-crisis enterprise value of 7.5 billion euros, according to Bloomberg Intelligence analysts.Speaking on a press call Wednesday, Spohr said the company would look at a minority listing of Technik, but added the depressed market meant it wasn’t the right time to launch a spin-off.Cuts ElsewhereThe company set out more precise cuts for its foreign airline units, where labor-protection laws are less stringent than in Germany. Austrian Airlines will see staff costs pared by 20%, with Brussels Airlines suffering a 25% reduction in the workforce and a 30% cut to its fleet. Spohr said he’s meeting this week with Austrian Chancellor Sebastian Kurz to finalize a state-aid package. Lufthansa has said its liquidity position is becoming “urgent,” and while the company didn’t give details, Spohr said it had enough cash to last until a June 25 shareholder vote on the bailout. The deal will dilute the holdings of current investors, though they’re expected to back it rather than risk insolvency.Airlines worldwide are reeling as the Covid-19 pandemic brings decades of travel growth to a shuddering halt. Industry executives are cutting back the workforce given demand could take several years to return to previous levels.Biggest BailoutLufthansa, previously regarded as among the most stable and successful airlines, is negotiating a bailout that’s the biggest for the industry so far. The deal with Germany will weigh on the carrier, with limits on how many planes it can purchase and a requirement that it give up lucrative landing slots in Munich and Frankfurt.The adjusted loss before interest and taxes widened to 1.22 billion euros from 336 million euros a year earlier. The imposition of travel lockdowns from mid-February led to an 18% drop in sales, with fuel-hedging losses also hurting results.The picture will be far worse in the current quarter, during which almost all of the carrier’s 760 planes have been grounded. Spohr said it’s impossible to provide full-year guidance, beyond saying the result will be significantly worse.(Adds details from press, analyst call graf 8, updates share)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.
- Zacks
Coronavirus Woes Mar Ryanair's (RYAAY) May Traffic Results
Ryanair (RYAAY) operates 701 scheduled flights in May including those for carrying out rescue activities and dispatching medicines to the COVID-19-affected areas.
- Reuters
As Lufthansa retrenches, Wizz Air looks to spread wings
Lufthansa pledged tough restructuring on Wednesday, even as budget rival Wizz Air upgraded a Middle Eastern expansion - underscoring the contrasting fortunes among airlines grappling with the coronavirus crisis. Lufthansa warned that deep cutbacks and asset sales will be necessary to pay off 9 billion euros ($10.1 billion) in German rescue aid, with more to come from Austria and Belgium. The group, whose carriers also include Swiss, Austrian and Brussels Airlines, expects a significant 2020 earnings decline and has begun talks on job cuts expected to impact as many as 20,000 positions.
- Yahoo Finance UK
What to watch: Upper Crust owner taps investors, Lufthansa books loss, stocks rise
A daily overview of the top business, market, and economic stories to watch in the UK, Europe, and abroad.
- Yahoo Finance UK
Coronavirus: Lufthansa books €2bn loss as it plans drastic cost cuts
Lufthansa will take "far-reaching measures" to counteract collapse of airline industry.
- Reuters
Lufthansa vows extensive revamp as losses balloon
Lufthansa has pledged a wide-ranging restructuring, from thousands of job cuts to asset sales, as it seeks to repay a 9 billion euro ($10.1 billion) state bailout and navigate deepening losses in the face of the coronavirus pandemic. "In view of the very slow recovery in demand, we must now take far-reaching restructuring measures," said Chief Executive Carsten Spohr. Job reductions would be "significantly more" than the 10,000 individuals flagged a few weeks ago, Spohr added later on a call with analysts and journalists.
- Bloomberg
U.S. Cases Rise 1.2%; NYC Keeps Monday Reopening: Virus Update
(Bloomberg) -- New York City still plans to begin reopening Monday, while Governor Andrew Cuomo warned that mass protests against police violence could accelerate the spread of coronavirus and undo weeks of social-distancing efforts.French Finance Minister Bruno Le Maire vowed not to raise taxes, even as the pandemic dealt a bigger blow to the economy than expected. Hong Kong extended virus-prevention measures after a new cluster of cases, and Tokyo’s infections spiked.In the U.K., Prime Minister Boris Johnson plans to reset his government’s agenda with a financial statement and a speech on the post-pandemic landscape. Meanwhile, the country’s statistics body criticized the government’s testing data.Key Developments:Virus Tracker: Cases pass 6.3 million; deaths exceed 378,000No-deal Brexit threat looms over pandemic-ravaged U.K.Wall Street sends wine, masks to clients with steakhouses closedTrump’s WHO exit threatens polio, tuberculosis along with CovidSocial distancing is improving your shopping experienceClosing factories the French way: A long, painful demiseSubscribe to a daily update on the virus from Bloomberg’s Prognosis team here. Click VRUS on the terminal for news and data on the coronavirus. For a look back at this week’s top stories from QuickTake, click here.Journals Raise Concerns About Data in Covid Studies (5:15 p.m. NY)Two prestigious medical journals said they have significant concerns about a database that was used to look at how older drugs may work in the treatment of Covid-19.The New England Journal of Medicine published an “expression of concern” about a study published by the journal on May 1 that looked at the use of heart drugs called ACE inhibitors in coronavirus patients. Later Tuesday the Lancet, a nearly 200-year-old U.K. medical journal, issued its own similar warning on a study about treating Covid-19 patients with the malaria drug hydroxychloroquine. Both studies relied on data from a firm called Surgisphere Corp., which says it aggregates information from medical records around the globe. Last week, more more than 200 scientists signed a letter to the Lancet asking for greater transparency regarding the hospitals where patients’ medical records came from and the method of analysis, along with other issues. A call Tuesday to Surgisphere wasn’t answered.Zoom Sales Soars on Video Conference Use (5:30 p.m. NY)Zoom Video Communications Inc. reported quarterly sales that more than doubled, leapfrogging analysts’ estimates, showing that a surge in demand for its video-conference service has translated into more paying customers. The company also doubled its annual revenue forecast. U.S. Cases Rise 1.2% (4 p.m. NY)Coronavirus cases in the U.S. increased 1.2% as compared with the same time Monday, to 1.82 million, according to data collected by Johns Hopkins University and Bloomberg News. That’s higher than Monday’s 1% rate, and in line with the average over the past seven days. Deaths rose 0.9% to 105,644.New York cases rose 0.4% to 373,040, compared with an average increas of 0.3% over the past seven days.Florida cases rose 1.1% to 57,447, compared with an average of 1.3% in the past seven days, according to the state’s health department. Deaths rose 2.8% to 2,530, the biggest jump since May 8.California cases climbed 2% to 115,310 while deaths increased 0.8% to 4,286, according to the state’s website.Texas cases rose 2.6% to 66,568, exceeding the seven-day average of 2.1%, according to state health department figures. Hospitalizations increased by 1% to 1,773 patients.Tyson Foods Says 591 Plant Workers Test Positive (2:56 p.m. NY)Tyson Foods said it would resume limited production on June 3 at an Iowa plant that had an outbreak of the coronavirus.At the Storm Lake plant, 591 workers tested positive out of 2,303 that were tested, the company announced Tuesday. More than 75% of the positive cases are asymptomatic.Separately, at the company’s Council Bluffs plant, 224 tested positive out of its 1,483 employees.Second Wave Won’t Prompt Arkansas Shutdown (2 p.m. NY)Even if there’s a spike in coronavirus cases this fall, Arkansans won’t be ordered to shelter in place, Governor Asa Hutchinson said Tuesday in testimony before the U.S. House Committee on Energy & Commerce. “We have to be able to manage through this risk,” said the Republican governor, who declined to issue a shelter-in-place order this spring.U.K. Minorities Face Higher Risk of Dying (12:37 p.m. NY)People from ethnic minority groups in England face a higher risk of dying if they develop a serious case of Covid-19 than white patients, an analysis by Public Health England showed.Males, people older than 80 years and those living in deprived areas are also more vulnerable, the agency said in a report published on Tuesday. The study didn’t take into account aggravating factors such as pre-existing medical conditions or obesity.NYC Mayor Says City Will Still Reopen (11:38 a.m. NY)Mayor Bill de Blasio still plans to begin reopening New York City on June 8, despite the unrest related to protests over the death of George Floyd and a curfew that will continue for the rest of the week.“It’s hard to believe that just a few days ago, all we were talking about was the pandemic,” de Blasio said Tuesday. “The pandemic is still there and we must address that. We need to reopen this city.”Last week, the mayor estimated that 200,000 to 400,000 people will be returning to work in construction, manufacturing, wholesale and curbside retail during the first phase of the city’s reopening.Swiss Keep Italy Border Controls (10:35 a.m. NY)Switzerland is sticking with controls at the Italian border, declining to mirror Rome’s step of abolishing them on June 3, according to a statement.The country said it’s too early to get rid off controls on its southern border. Swiss citizens and people with a Swiss residence permit will be able to enter Switzerland from Italy while the restrictions are in force.Eurostar Increases London-Paris Service (10:35 a.m. NY)Eurostar has made a small increase to service due to a slight rise in demand, according to a representative for the high-speed rail service.Eurostar has two trains a day in each direction on the Paris-London route Monday to Thursday and three trains on Friday, Saturday and Sunday. It maintains one train in each direction on the London-Brussels route.Iceland Proceeds With Airport Testing (9:45 a.m. NY)Iceland is proceeding with plans to test all incoming airline passengers for Covid-19 from June 15 in a bid to salvage tourism, its biggest export. The government’s announcement follows consultations with the country’s chief epidemiologist and a deal with DeCODE Genetics, which will assist with the testing facilities.Separately, the Portuguese government said it’s in advanced talks with Germany about setting up an “air corridor” for tourists. The government also started talks about this with the U.K. last week, Economy Minister Pedro Siza Vieira said at a parliamentary hearing in Lisbon.Tokyo Issues Virus Alert After Cases Spike (9:44 a.m. NY)Tokyo issued an alert to residents for the first time urging additional caution against the pandemic, after a spike in new cases. There were 34 new infections in the Japanese capital on Tuesday, the most in a single day in more than three weeks.Governor Yuriko Koike triggered what she dubbed a “Tokyo Alert,” aiming to heighten residents’ awareness, which could lead to businesses in the capital again being asked to close their doors should a surge continue.Lufthansa Introduces Mandatory Face Masks (9:35 a.m. NY)Lufthansa is making it compulsory for people to wear face masks on its flights from June 8, according to a statement. Passengers must wear the masks when boarding, during the flight and when leaving the aircraft. Exceptions will be made for children under the age of 6 and for health reasons.Top U.K. Statistics Official Questions Government Data (8:25 a.m. NY)The U.K’s statistics body criticized the government’s coronavirus-testing data, saying it falls well short of expectations. In a letter Tuesday to Health Secretary Matt Hancock, David Norgrove, chair of the U.K. Statistics Authority, said that the “aim seems to be to show the largest possible number of tests,” which gives them “limited value” in terms of analysis.“It is not surprising that given their inadequacy, data on testing are so widely criticized and often mistrusted,” he wrote.Norway’s $10 Billion Oil Aid Package Set for a Boost (8:11 a.m. NY)Norway’s opposition lawmakers are set to beef up a 100 billion-krone ($10 billion) aid package for its ailing oil industry after executives complained the government’s proposal would do little to stimulate investments and save jobs.The global oil industry has been hit hard by the Covid-19 outbreak, which reduced demand for crude when the market was already struggling with a glut. In Norway, western Europe’s biggest producer of oil and gas, companies are cutting spending just as the country faces a dearth of big projects in coming years.Dutch Deaths In Single Digits For Third Consecutive Day (8:09 a.m. NY)The Netherlands reported five new fatalities, the third consecutive day of single-digit growth. The total tally stands at 5,967. Confirmed cases rose 0.2%, below the recent seven-day average, to 46,647. Hospital admissions are also hovering around a record low.The Netherlands on Monday entered a new phase of easing its lockdown with bars and restaurants reopening under certain conditions.Working Out at Home Won’t Replace Going to Gym, Barclays Says (7:07 a.m. NY)Home workouts may have become a lockdown staple, but Barclays Plc analysts say gym-goers won’t be ditching their memberships anytime soon. A survey of U.K consumers found that only 14% of gym members planned to cancel their contracts, despite 35% of them changing their attitude to home exercising amid the outbreak, the bank said in a note to clients Tuesday.U.K. Banking Giants to Back $18.8 Billion Small-Business Fund (7:05 a.m. NY)An investment firm backed by the biggest U.K. banks is working on a 15 billion-pound ($18.8 billion) fund to inject money into smaller companies that could struggle to repay debt they’ve taken on during the coronavirus outbreak.The Business Growth Fund is in talks with the government and investors such as insurers and pension funds on proposals for a public-private fund to invest in viable companies that have received loans of as much as 5 million pounds under a government crisis program, according to Chief Executive Officer Stephen Welton. About 46,000 loans totaling nearly 9 billion pounds have been made under the program so far, according to Treasury data.France Vows Not to Hike Tax While Weighing How to Pay Virus Bill (6:52 a.m. NY)France won’t raise taxes even with the economy suffering a deeper recession than previously expected because of the coronavirus lockdown, Finance Minister Bruno Le Maire said.The contraction this year will amount to 11%, more than the 8% previously predicted. That’s also more than the 9% slump forecast by economists in a Bloomberg survey.“Today we have taxation that is very heavy, among the highest of all developed economies so good sense is not to increase pressure on French people,” Le Maire said on French radio RTL. “Yes, debt will have to be paid back, but not by raising taxes -- by raising growth.”Italy’s Conte Urges National Renewal Before Travel Ban Expires (6:45 a.m. NY)Italian Prime Minister Giuseppe Conte marked Italy’s national day with an appeal to citizens to work together to revive the country, as his government prepares to lift restrictions on domestic travel from Wednesday.With the number of new coronavirus cases continuing to decline, Italians will be allowed to travel freely around the country again, ending almost three months of confinement to their home region to limit transmission of the disease.“Let’s combine and concentrate all our energy in the shared effort to pick ourselves up and begin again with maximum determination,” Conte said in a message posted Tuesday on Facebook.Qatar Airways Chief Demands Flexibility on Aircraft Deliveries (6:44 a.m. NY)The head of Qatar Airways called on the world’s two major planemakers to ease demands that ailing carriers accept delivery of new aircraft, saying their future relationship was at stake.Airbus SE and Boeing Co. should accept delivery deferrals until at least 2022, Qatar Airways Chief Executive Officer Akbar Al Baker said in an interview Tuesday with Bloomberg TV.“What is important is for Boeing and Airbus to show their customers that they are not only there with them in good times, but also in bad times,” Al Baker said. “If they don’t oblige, they will permanently lose us as a customer.”India’s Biggest Airline Unable to Give Growth Guidance (6:42 a.m. NY)IndiGo, operated by InterGlobe Aviation Ltd., said it’s unable to give any guidance on future capacity growth as the coronavirus pandemic destroyed demand for air travel in one of the world’s fastest-growing aviation markets.The airline posted a loss of 8.7 billion rupees ($115 million) for the three months ended March 31, compared with a profit of 5.9 billion rupees in the same period a year earlier.Turkish Airlines to Start Europe Flights on June 18, Anadolu Says (6:24 a.m. NY)Flagship carrier to start flights between six European countries and Turkey on June 18, state-run Anadolu Agency reports. It will be Turkey’s first serious step in lifting restrictions on international travel since shutting down flights more than two months ago.Tourists from EU member states and Russia account for a majority of foreign visitors Turkey relies on for tens of billions of dollars in foreign-exchange revenues every year. In their absence due to the pandemic, Turkey is offering cheap loans to attract local visitors to holiday resorts across the country.Egypt Caps Costs for Treating Coronvirus at Private Hospitals (6:24 a.m. NY)Egypt set a daily cap of 10,000 Egyptian pounds ($626) for treating coronavirus patients at private hospitals, citing complaints about inflated prices. The Health Ministry stipulated a top-tier payment of 7,500-10,000 pounds for patients in intensive care and who require a ventilator. It capped the daily cost for patients in isolation and not in an ICU or on a ventilator at 1,500-3,000 pounds, according to a statement.U.K. House Prices Drop Most Since 2009 Under Lockdown (5:33 p.m. HK)Property values dropped 1.7% in May, the biggest decline since February 2009, Nationwide Building Society said Tuesday.Separately, the Bank of England said U.K. household borrowing plunged in April as the first full month of lockdown pummeled the economy. Households on balance repaid 7.4 billion pounds ($9.3 billion) of consumer credit in April, the most since comparable records began in 1993.The cost of the U.K.’s virus-support measures has risen to 56 billion pounds as the government pays the wages of 8.7 million jobs, according to the latest figures from the Treasury.China Vehicle Sales Likely Rose for a Second Month, Group Says (5:28 p.m. HK)Wholesales of cars as well as commercial vehicles such as light trucks probably increased about 12% to 2.14 million units last month, the China Association of Automobile Manufacturers said Tuesday, signaling a recovery in the world’s largest car market is gathering pace.In the first five months of the year, deliveries to dealers fell 23% to 7.9 million units, the trade body said in a statement, without giving further details.Iran Reports Rise in Number of New Virus Cases (5:27 p.m. HK)Iran’s daily number of new coronavirus cases edged up to 3,117 from 2,979 on Monday, bringing the total known infections to 157,562. The death tally rose to 7,942 with 64 more deaths in the past 24 hours.South Korea Plans Third Extra Budget, Official Says (5:25 p.m.)The government will submit a 35.3 trillion won ($28 billion) extra budget to parliament soon to lay the groundwork for post-pandemic growth, senior presidential secretary Kang Ki-jung said Tuesday during a meeting with opposition party officials, according to footage from Yonhap TV.Virus-Linked Deaths in England, Wales Reach Lowest Since March (4:59 p.m. HK)Almost 2,590 deaths registered in England and Wales mentioned the virus on the death certificate in the week ended May 22, the Office for National Statistics said on Tuesday. That’s a drop of 32% from a week earlier, and the lowest since the week of March 27, when the government introduced the lockdown.Hong Kong Extends Gathering Limit of 8 People to June 18 (4:46 p.m. HK)Hong Kong extended its ban on public gatherings of more than eight people to June 18, Secretary for Food and Health Sophia Chan said, after the government found a local cluster of nine people infected by the coronavirus.The city also prolonged the 14-day quarantine requirement for travelers from China, Macau and Taiwan to July 7 and other overseas visitors to Sept. 18. Hong Kong said it found four new local cases and two imported cases on Tuesday.(An earlier version corrected the date for the Hong Kong extension.)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
European Stocks Rise to 3-Month High on Stimulus, Reopening Bets
(Bloomberg) -- European stocks rose to their highest level in almost three months, buoyed by optimism about economies reopening and stimulus measures.The Stoxx Europe 600 Index added 1.6% at the close, its sixth advance in seven days. The DAX Index jumped 3.8% as German markets reopened after a holiday and as Chancellor Angela Merkel seeks to broker a compromise on a second stimulus package. Deutsche Lufthansa AG rose 3.4% after the airline overcame most of the barriers to receiving a $10 billion government bailout.European equities have retraced more than half the decline from a selloff that began in February. Easing lockdowns and unprecedented stimulus measures are boosting sentiment, sending the Stoxx 600 toward its 100-day moving average for the first time since late February. Still, escalating U.S.-China tensions have tempered some gains recently.“So far, investors remain focused on global business reopening, the fact that the number of new Covid cases remains stable as economies restart operating and of course, the massive fiscal and monetary support from central banks and governments,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “The positive sentiment outweighs even a faltering phase-one deal between Beijing and Washington.”France’s CAC 40 Index climbed 2% even after the country’s finance minister said its economy will suffer a deeper recession than previously expected.Cyclicals were top performers on Tuesday, led by autos. Carmakers rallied after May sales figures from three of region’s biggest auto markets indicated the demand drop due to the Covid-19 pandemic is slowing.Tech shares rose 1.5%, erasing their 2020 losses. Along with health-care shares -- the only other sector in the green this year -- they have been the biggest beneficiaries from the Covid-19 fallout.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 Gains Following Breakthrough on $10 Billion Bailout
(Bloomberg) -- Deutsche Lufthansa AG shares surged after Europe’s biggest airline overcame most of the barriers to receiving a 9 billion-euro ($10 billion) bailout from the German government.The stock gained as much as 8.3% and was priced 6.6% higher at 9.75 euros as of 9:04 a.m. Tuesday, the first day of trading on the Frankfurt bourse since last week.Barriers to the rescue began to crumble late Friday, with Lufthansa agreeing to hand over operating slots at its main hubs to win European Union backing for the deal. Its supervisory board approved the compromise in a vote on Monday.Lufthansa is seeking emergency aid after the Covid-19 pandemic punctured a decades-long aviation boom, grounding flights and draining cash reserves. The company expects its fleet to be 100 aircraft smaller following the crisis, implying the loss of 10,000 jobs.While investors still need to vote on a package that will dilute their holdings at a meeting on June 25, analysts say they’re likely to grant their approval rather than see Lufthansa slide toward insolvency.The EU still has to approve other aspects of a deal that will make Germany Lufthansa’s biggest shareholder, thrusting the state back into the heart of company privatized with fanfare over two decades ago.Under the compromise with the EU, Lufthansa will reduce its presence in Frankfurt and Munich by four aircraft apiece and surrender enough slots for 12 daily return flights, offering new challengers a toehold at its fortress hubs.Lufthansa will publish first-quarter earnings on Wednesday.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 Supervisory Board Backs $10 Billion Bailout Deal
(Bloomberg) -- Deutsche Lufthansa AG’s supervisory board backed a 9 billion-euro ($10 billion) bailout by the German government, paving the way for the airline to receive the lifeline should investors approve it.With cash reserves dwindling, the board voted in favor of the plan and called an extraordinary shareholder meeting for June 25. Its approval was unexpectedly delayed last week after members balked at European Union demands for slot disposals, a matter resolved in a deal sealed late Friday.Investors now face a choice between a capital hike that will dilute their holdings, or tipping Europe’s biggest airline toward insolvency. Lufthansa’s management has told German officials and labor representatives that it will run out of cash on June 15, people familiar with the matter have said.“We recommend that our shareholders follow this path, even if it requires them to make substantial contributions to stabilizing their company,” supervisory board Chairman Karl-Ludwig Kley said in a statement, adding that the final accord had been “a very difficult decision” involving “intensive discussion.”Daniel Roeska, a transportation analyst at Sanford C. Bernstein, said in an email that it would be foolhardy for investors to vote down the package and that he expects them to fall into line behind the board.Compromise DealWith Lufthansa fighting for survival after the coronavirus crisis grounded global fleets, Germany offered a package of loans and equity investment. But when the EU demanded it give up slots, the supervisory board held off on accepting the lifeline, throwing the rescue into turmoil after weeks of talks.Under the compromise deal reached Friday, Lufthansa will reduce its presence in Frankfurt and Munich by four aircraft apiece and surrender enough slots for 12 daily return flights. The EU intends the settlement to give new airlines a toehold to challenge the dominant German carrier at its fortress hubs.Lufthansa’s bailout will set a precedent for airlines receiving direct state support to give up slots, the EU’s antitrust chief said in an interview Monday. Air France-KLM has won approval for a loan from the French government but has said it may seek further aid.Same Category“If they come back for recapitalization, of course, they will be in the same category as Lufthansa has been,” Competition Commissioner Margrethe Vestager told Bloomberg TV.The EU still has to approve other aspects of a deal that will make Germany the carrier’s biggest shareholder, thrusting the state back into the heart of company privatized with fanfare over two decades ago.Like airlines the world over, Lufthansa has been struggling for survival after the Covid-19 pandemic punctured a decades-long aviation boom. The company expects its fleet to be 100 aircraft smaller post-crisis, implying the loss of 10,000 jobs.“The expected slow market recovery in global air traffic makes an adjustment of our capacities unavoidable,” Chief Executive Officer Carsten Spohr said Monday. “Among other things, we want to discuss with our collective bargaining and social partners how the impact of this development can be softened in the most socially acceptable way possible.”Lufthansa also said it will publish its interim report for first-quarter earnings on Wednesday, after delaying the statement originally due in late April.(Updates with analyst comment in fifth 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 supervisory board rubber stamps $10 billion state bailout
Lufthansa's <LHAG.DE> supervisory board has approved a 9 billion euro government bailout that will force the German airline to give some of its prized landing slots to rivals. The approval marks the latest step in the complex state rescue of Lufthansa, which has been badly hit by the coronavirus pandemic's impact on the travel sector. Under the plans, the German government will take a 20% stake in the airline, which could rise to 25% plus one share in the event of a takeover attempt, as well as two seats on its supervisory board.
- Bloomberg
Lufthansa Bailout Set to Trigger Turf War With Low-Cost Rivals
(Bloomberg) -- Deutsche Lufthansa AG may have won its battle for state aid, but its surrender of airport slots to appease regulators heralds heightened conflict between European aviation’s old guard and low-cost challengers.A rivalry that’s been simmering for years has been given fresh impetus by the coronavirus crisis, with former flag carriers falling back on government support as discounters including Ryanair Holdings Plc and Wizz Air Holdings Plc argue that the market alone should dictate who survives.Lufthansa’s 9 billion-euro ($9.9 billion) bailout and a slots accord with the European Union overnight Friday handed the region’s biggest airline a lifeline. Now, the German group and network carriers such as Air France-KLM face a battle royale in repelling no-frills operators that came into the crisis stronger and plan to use it to gain ground in territories hitherto largely closed to them.“We are trying to take advantage of the situation,” Wizz Chief Executive Officer Jozsef Varadi said in an interview. “Lufthansa is getting a huge financial edge, but they’ll need to restructure after taking all of this money. So Germany will bring opportunities.”Aid ImbalanceDiscount airlines have received only modest support compared with legacy carriers. Ryanair, Wizz and EasyJet Plc have tapped the U.K.’s Covid Corporate Financing Facility for a combined 1.5 billion pounds ($1.8 billion), while Air France-KLM has received 7 billion euros from the French state and could overtake Lufthansa’s bailout once Dutch support is finalized.Low-cost carriers have also been quicker off the mark in slashing costs, with Ryanair, which has its biggest base at London Stansted, announcing 3,000 job cuts a month ago when Lufthansa was still in the early stages of putting together its bailout request.The strength of the challenge to Lufthansa in particular will depend on take-up for the 12 pairs of daily flight slots to be made available to competitors at its Frankfurt and Munich hubs as part of the bailout settlement ordered by the EU. Complicating matters is a proviso that says only new entrants can obtain the takeoff and landing rights during the first 18 months.Market DistortionThat would allow Ryanair, which has flights in Frankfurt, to target Munich, and EasyJet to do the reverse. Budapest-based Wizz, Europe’s third-biggest discount carrier, doesn’t currently serve either airport so could seek slots at both.Spokespeople for Ryanair and EasyJet declined to comment.Read more:Germany, Lufthansa Prove Tougher Foes for Vestager Than GoogleMerkel Is Seizing Her Chance to Revolutionize Germany’s EconomyWe All Might Be Flying in Planes Again Soon: Chris BryantRyanair gained 4.8% as of 11:18 a.m. in Dublin, while EasyJet advanced 4.4% and Wizz was up 3.8% in London. Lufthansa added 5.4% on Tradegate with regular trading in Frankfurt closed for a German holiday.The biggest opportunities for the low-cost players lie in Germany, Italy and Norway, said Mark Manduca, an analyst with Citigroup.“After the crisis passes and a price war this summer ensues, Ryanair and Wizz stand on the cusp of a three- to five-year consolidation and expansion story, as the participants around them shrink and flounder,” he said in a research note.State aid to the likes of Lufthansa will at least initially bend the market in their favor, EU competition watchdog Margrethe Vestager said in an interview with Bloomberg TV. “This is why we also have remedies, to try to limit that market distortion,” she said.The Lufthansa case is a template for EU oversight of other virus-related recapitalizations, Vestager said. The bloc would likely review any equity injection into Air France-KLM by France or the Netherlands, and is in close contact with the Italian government over the nationalization of bankrupt Alitalia Spa, which she called “a special case” because of its pre-existing financial distress.That budget airlines will make inroads isn’t a given.In Germany, the major hubs of Frankfurt and Munich charge typically higher fees than at the smaller airports traditional favored by discount operators, something Varadi said is a major obstacle to flying there.Both have a large proportion of passengers who transfer on or off long-distance flights, limiting the market share available to short-haul carriers.Stationing staff in Germany also means grappling with stringent employment laws and powerful unions, potential headaches for companies seeking to keep expenses low.Lufthansa’s pilot, cabin-crew and ground-crew unions wrote to European Commission President Ursula von Der Leyen on Friday saying that a shift of slots to discount carriers would cause a “massive hollowing out” of labor standards and pay.Disruption AheadThe French market could open up as Air France-KLM reins in its network in response to environmental demands from the French government. A restructuring to be presented within months will call for a 40% cut in domestic French capacity by the end of 2021, Chief Executive Officer Ben Smith told shareholders last week.The company has also said it may raise new equity, potentially triggering EU scrutiny that could lead to slots being made available in the busy Paris and Amsterdam markets. The initial funding package avoided increasing state holdings amid acrimony between the French and Dutch governments over existing stakes.In Italy, Alitalia was in bankruptcy protection even before the virus hit. The rescue is regarded as dubious given the airline’s status, and the EU is expected to begin an investigation. Slot availability in Rome and Milan could be one outcome.Full-service airlines are also in retreat in the U.K., where British Airways and Virgin Atlantic Airways Ltd. have indicated they’ll exit London Gatwick airport to consolidate operations at the city’s Heathrow hub.That will consolidate Gatwick’s status as a discount and leisure-oriented base, leaving EasyJet unchallenged as the biggest operator and offering an opportunity for Ryanair and Wizz to expand their more modest presence.Discount airlines are also cutting their cloth, though not nearly so much.Wizz will maintain all of its European bases and routes, while trimming frequencies, Varadi said. It announced four new hubs and 50 new routes on Friday.“We’re sensing strong demand, which we aim to tap as travel restrictions ease,” the CEO said.(Updates with Vestager comments in 12th 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
We All Might Be Flying in Planes Again Soon
(Bloomberg Opinion) -- Covid-19 became a pandemic because airplane passengers carried the new coronavirus with them around the world. As that became clear, airlines grounded nearly all of their fleets, governments issued travel restrictions and mandatory quarantines, and tourist attractions and conferences closed down. With no reason to fly, a quick recovery for air travel seemed unlikely. Warren Buffett dumped his airline stocks, claiming that the “world has changed.”Passengers also wouldn’t feel safe packed inside a metal tube for hours, would they?Happily for the industry, if not for the climate, the seemingly insurmountable barriers to air travel have begun to look less daunting. “We believe the worst is behind us, and we’re on the uptick,” American Airlines Group Inc.’s boss, Doug Parker, said after a surge in travel over the U.S. Memorial Day holiday weekend.Investors have taken notice. The Bloomberg Americas Airlines stocks index has rebounded by almost one-third from the mid-May low, and European carriers have made similar gains. Shares in German tour operator Tui AG have risen too.Such optimism feels jarring when airlines, American Airlines included, are poised to cut thousands of jobs. Most are still burning huge amounts of cash. Deutsche Lufthansa AG needs a 9 billion-euro ($10 billion) bailout, and Latam Airlines Group SA joined Latin American peer Avianca Holdings SA in filing for bankruptcy last week.But Parker is probably right to expect a continued recovery, at least on domestic and short-haul routes. This won’t be enough to put debt-laden airlines on a secure footing, and a full demand recovery probably won’t happen for a couple more years. But, right now, a desperate industry will take any good news it can get. The rigorous hygiene measures airlines have announced should go a long way toward restoring passenger confidence. European budget carrier Ryanair Holdings Plc expects to operate at 40% of normal capacity from July, and the way bookings are shaping up suggests those planes will probably be at least half full. EasyJet Plc sees “encouraging” trends and notes that winter bookings are higher than usual for this time of year, although part of that may be because people have refund vouchers to use and are rebooking cancelled trips. Ryanair’s extensive summer flight schedule had seemed premature a couple of weeks ago, but the travel restrictions that kept Europeans from moving around the continent are being relaxed. Starting in July, Spain is set to drop its requirement for international arrivals to quarantine for 14 days. Britain imposed a similar rule but is under immense pressure to abandon it. Travel between Europe and the U.S. will take longer to open up, but even on this there are encouraging signs of political will to get people flying again. A month ago, United Airlines Holdings Inc.’s chief executive officer, Scott Kirby, lamented that there wouldn’t be a recovery in flying until attractions like Disney World and the Paris museums were open again.Well, they will be soon. It’s already possible to visit the Acropolis in Athens and St Peter’s Basilica in Rome. Paris’s parks and museums are set to reopen from June. The French capital is usually swamped with tourists at this time of year, so there’s an incentive for travelers to get there first. Walt Disney World expects to reopen its Florida park from July, albeit with compulsory face masks and a ban on hugging your favorite Disney character.I’ve written before about how things like wearing masks and having to ask permission to use the toilet will make flying even less enjoyable. But these measures may make passengers feel safer. For example, while the gowns and other personal protective equipment issued to Emirates’ cabin crew are a little intimidating, they’re likely to put some nervous flyers at ease.As with SARS almost two decades ago, there are understandable concerns about catching coronavirus within the aircraft cabin, most likely from someone seated close by. The evidence isn’t comprehensive or conclusive, but so far there are surprisingly few documented cases of this happening with Covid-19. Airline industry body IATA says it knows of only one case where a person transmitted the virus to more than one person on board. Not surprisingly, plane manufacturers Airbus SE and Boeing Co. are studying the subject intensively. There are other plausible reasons why flying might be safer than you’d think: The air is filtered and frequently replenished from outside, seats act as somewhat of a barrier and passengers don’t move around the cabin much. Singing, yelling and talking loudly — contributors to so-called super-spreader infection events — are a big faux pas when you fly. Many passengers would still prefer the middle seat to be empty, but as I’ve written before, unless ticket prices rise, that would severely hamper airlines’ ability to break even.Of course, the longer someone’s on board, the greater the chance they’re exposed to infection. Hence people may feel comfortable flying domestic and short-haul before they’re willing to fly halfway around the globe.Companies will probably take longer to get comfortable with the risk (and potential liability) of their employees flying for business. About half the corporate clients American Airlines surveyed still have a travel ban, although that’s down from two-thirds at the peak of the crisis. Millions of potential passengers have also lost their jobs and won’t feel able to splash out on holidays.And then there are the psychological scars from the prolonged lockdown. Being outside now feels a lot safer than being in any kind of confined space. A staycation in a local Airbnb might feel preferable to getting on a plane.For those willing to take the risk, and who can find adequate travel insurance, a rare opportunity awaits. Want to see Venice without the crowds? Now’s your chance.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
U.S. Cases Rise; Trump G-7 May Draw Fewer Leaders: Virus Update
(Bloomberg) -- New York is targeting “hotspots” as New York City prepares to reopen in less than two weeks. U.S. cases increased 1.7%, faster than the one-week daily average.Attendance at a June U.S.-hosted meeting of world leaders could shrink because of the outbreak. Siemens Healthineers received U.S. emergency authorization for a coronavirus antibody test.European Union leaders urged the U.S. to reverse a decision to quit the World Health Organization. Italian cases trended lower as the government starts to allow travel, despite objections over letting people leave the hard-hit region near Milan.Key Developments:Virus Tracker: Cases top 6 million; deaths over 367,000Indonesia to open malls, entertainment sites as cases riseTexas shows the world how to reopen cautiously, for nowChinese vaccine expected to begin mass output soonRace to the freezer: Europe’s food glut has nowhere to goPizza chains have windfall on surge in takeout, deliveriesBaseball on ESPN: Korea’s major league plays through outbreakSubscribe to a daily update on the virus from Bloomberg’s Prognosis team here. Click VRUS on the terminal for news and data on the coronavirus. For a look back at this week’s top stories from QuickTake, click here.U.K., France Mull G-7 as Germany Skips (5 p.m. NY)The Covid-19 outbreak may deter German Chancellor Angela Merkel from attending a Group of Seven leaders meeting in the U.S., but other leaders are still in talks with the host, President Donald Trump.Trump spoke with French President Emmanuel Macron on Saturday with “progress on convening the G-7” among the topics, the White House said. On Friday, U.K. Prime Minister Boris Johnson and Trump “discussed the importance of leaders meeting in the U.S. in person, if possible,” according to Johnson’s office. A Merkel spokesman on Saturday said “she’s unable to confirm her personal participation” given the current state of events.The meeting was planned for Trump’s Doral resort in Florida, was moved to Camp David then became a video conference because of the pandemic. Trump is pushing the G-7 leaders to travel to the U.S. for an in-person meeting.U.S. Cases Rise 1.7%, Above Week’s Average (4 p.m. NY)U.S. cases increased 1.7% from the same time Friday, to 1.76 million, according to data collected by Johns Hopkins University and Bloomberg News. The national increase exceeded the average daily increase of 1.3% for the past week and was the biggest percentage rise since May 22. Deaths climbed 1.2% to 103,389.New York reported 1,376 new cases, for a total of 369,660, with 67 deaths -- the same as Friday and the fifth day of fatalities under 75. Deaths totaled 23,848.New Jersey had 910 new cases, pushing the total to 159,608, with 113 new deaths for a total of 11,634, Governor Phil Murphy reported.California reported 2,992 new cases, for a total of 106,878, and added 88 deaths, with the fatality count at 4,156.Pennsylvania reported 680 new cases, for a total of 71,415, and 73 new deaths, to total 5,537, the state health department said.Florida’s cases rose 1.7% to 55,424 and deaths rose to 2,447, the health department said.Greece Allows More Flights from Mid-June (3:30 p.m. NY)Greece will allow visitors from more nations, including the U.S. and U.K., to arrive at Athens and Thessaloniki airports starting June 15, the Foreign Ministry said. After July 1, flights can land at all Greek airports.The government will use the European Union Aviation Safety Agency’s list of airports to determine testing for arriving passengers. If travel originates at an airport not on the affected-area list, then visitors are subject to random tests, the Foreign Ministry said. If the journey begins at an airport on the EASA list, then visitors who test negative will self-quarantine for seven days and if positive will be under supervised quarantine for 14 days.Greece will reopen borders with Albania, Bulgaria and North Macedonia on June 15, the Foreign Ministry said with visitors subject to random tests. Arrivals by sea will begin July 1.French Cases Inch Higher (2:10 p.m. NY)France reported 57 new deaths, raising the total to 28,771, based on hospital data, with reporting of nursing-home fatalities delayed to Tuesday. New cases climbed by 1,828, or 0.8%, to 225,898.FDA Authorizes Siemens Antibody Test (2:10 p.m. NY)Siemens Healthineers AG received U.S. Food and Drug Administration emergency use authorization for a coronavirus antibody test, used to identify recent or prior infection in humans. The company had expected the test to be available by late May and aims to produce more than 50 million tests a month starting in June.N.Y. Targets NYC ‘Hotspots’ (2 p.m. NY)Governor Andrew Cuomo said the state plans to get New York City reopened by focusing on “hotspots” -- neighborhoods where positive cases can be nearly 50% and are largely in minority communities. The city average rate is about 20%.“We have work to do but we’ll still get it done by June 8,” he said.Cuomo also signed a law to compensate the families of hundreds of essential workers who have died in the outbreak.Italy Cases on Declining Trend (12:01 pm NY)Italy reported 416 new cases, up from 516 a day earlier, confirming a declining trend as the total reached 232,664. Total deaths rose to 33,340. The government confirmed plans to allow travel between regions starting June 3 even as some regional governors opposed letting people from the hard-hit Lombardy region move freely.N.Y. Daily Deaths Unchanged (11:45 a.m. NY)New York reported 67 new deaths, Governor Andrew Cuomo said at a Saturday press conference. The figure is the same as reported on Friday and the fifth straight day below 75 fatalities. The state reported 1,376 new cases, for a total of 369,660.U.K. Permits Live Sports Events (11:30 a.m. NY)The U.K. will allow live sports events, without spectators, and further relax restrictions on physical exercise starting Monday as the country eases lockdown measures.Horse racing will be allowed behind closed doors, with other sports like soccer, rugby, cricket, golf and snooker to follow, but without fans, Culture Secretary Oliver Dowden said at a press conference. “British sports recovery has begun,” Dowden said.England’s Premier League plans to resume matches on June 17, after consulting with the clubs, players and managers, Chief Executive Richard Masters said after the government announcement.Spain Deaths Rise (11:25 a.m. NY)The Spanish health ministry said total coronavirus cases increased by 271 to 239,228 in the past 24 hours. Total fatalities rose to 27,125 with 43 new deaths reported in the past seven days.Somalia Votes in 2021, Despite Outbreak (10:30 a.m. NY)Somalia will push ahead with elections in early 2021, Prime Minister Hassan Ali Kheyre said after a cabinet meeting, removing doubt that the spread of Covid-19 will delay the vote.The Horn-of-Africa nation is seeking debt relief as the pandemic adds to its woes, from an insurgency to locusts. It has almost 2,000 cases and a health system ill-equipped to handle the outbreak.South Africa Allows Domestic Flights (10:20 a.m. NY)South Africa will permit air travel from four main airports starting Monday as the nation eases lockdown measures. Limited domestic flights will be allowed for business, and passengers must give a reason, Transport Minister Fikile Mbalula said in a televised briefing on Saturday.India to Ease Lockdown in Stages (8:52 a.m. NY)India announced a phased lifting of the nationwide lockdown by allowing malls, restaurants and places of worship to open from June 8, the interior ministry said in a statement.The country, which had enforced sweeping and strict stay-at-home orders from March 25, will limit the stringent rules to areas that have a large number of active cases. Authorities will decide to open schools and colleges in July, while international air travel will resume in the final phase. The exit plan comes even as India has been unable to flatten its curve despite the restrictions which have left its already troubled economy in deep disrepair.EU Urges U.S. to Reconsider WHO Decision (8:24 a.m. NY)The European Union called on the U.S. to reconsider its decision to terminate its relationship with the World Health Organization, which President Donald Trump has accused of being too deferential to China.“Global cooperation and solidarity through multilateral efforts are the only effective and viable avenues to win this battle the world is facing,” according to a joint statement Saturday from European Commission President Ursula von der Leyen and the bloc’s chief foreign envoy, Josep Borrell. “We urge the U.S. to reconsider its announced decision.”Portugal’s Virus Cases Slow (8:04 a.m. NY)Portugal reported 257 new coronavirus cases on Saturday, taking the total to 32,203, after recording more than 300 infections in each of the two previous days, the government said. The increase in new cases has been mostly in the greater Lisbon area and led the government on Friday to delay the planned reopening of malls in that region. The number of cases in intensive care units fell to 63 on Saturday, remaining at the lowest level since March.Macau’s Economy Shrinks by Almost Half (6:46 a.m. NY)Macau’s economy posted a deeper contraction in the first quarter as lockdown measures introduced to contain the virus outbreak hit revenue from gambling, hotels, and tourism.Gross domestic product in Macau plummeted 48.7% in the first three months of 2020, according to the city’s statistics department. That is the fifth straight quarterly decline.Belgium’s Socialists Propose $41.7 Billion Stimulus (6:14 a.m. NY)Paul Magnette, the head of Belgium’s Socialist party, proposed a 37.6 billion-euro ($41.7 billion) stimulus package to combat the economic toll of the global pandemic, according to an interview with Le Soir. The aid would target catering, cultural and health-care industries, he said.Iran Reports Fewer New Cases (6:12 a.m. NY)Iran’s infection tally rose to 148,950 as the daily number of new cases dropped to 2,282 from 2,819 on Friday, the highest daily number of cases in eight weeks. The virus death toll reached 7,734 with 57 more deaths overnight.S&P Sees Abu Dhabi, Bahrain Economies Shrinking (5:20 p.m. HK)Abu Dhabi’s economy will contract 7.5% this year, S&P Global Ratings said, citing lower oil production and the pandemic.Bahrain’s economy will shrink 5% this year because of low oil prices, although government stimulus measures should provide some support, S&P said. The ratings company expects Bahrain’s economy to rebound in 2021 as oil prices recover and regional activity increases.Indonesia Gears Up for Post-Holiday Return (5:02 p.m. HK)Indonesia’s capital Jakarta is anticipating one million vehicles will enter the city as people return from Eid al-Fitr holidays. Traffic, including motorcycles, is projected to peak from Saturday to Monday, according to a Cabinet Secretariat statement. While the figure is lower compared to the 2.8 million vehicles recorded last year, the flow of so many travelers is raising concern as the nation’s coronavirus cases grow.Indonesia now has the highest coronavirus death toll in Southeast Asia, with 1,573 people succumbing to the disease as of Saturday. New cases have more than doubled in May, with the total reaching 25,773.Uzbekistan Extends Lockdown (3:36 p.m. HK)The Uzbek government has decided to extend lockdown restrictions until June 15. Central Asia’s most populous nation has confirmed 3,513 cases of infection of the coronavirus, with 14 deaths and 2,728 recoveries.Singapore Reports 506 New Cases (3:30 p.m. HK)Singapore reported 506 new infections as of Saturday, according to a statement from its Health Ministry. A vast majority of the additional infections are of work permit-holders who live in foreign workers’ dormitories, according to the statement. The ministry is expected to provide additional details in the evening, it added.Chinese Vaccine Expected to Begin Mass Output This Year (3:25 p.m. HK)A front-running Covid-19 vaccine being developed in China is expected to be available as soon as the end of this year, according to a report published in the official Wechat account of the State-owned Assets Supervision and Administration Commission.The vaccine, jointly developed by the Beijing Institute of Biological Products and China National Biotec Group Co., has completed phase II testing and may be ready for the market at the end of this year or early next year, said the report.The production line for the vaccine will be fully disinfected and closed in preparation for output to start Saturday, and will have a manufacturing capacity of 100 million-120 million vaccines each year.Iran Lifts Restriction on Shopping Hours (2:26 p.m. HK)Iran has lifted a restriction on the operating hours of shopping malls in the latest step of reopening the economy. Meanwhile, all mosques in the country will be open to worshipers for daily prayers three times a day, President Hassan Rouhani said in a national coronavirus taskforce briefing broadcast on state TV.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 Reaches EU Deal on $9.9 Billion Lufthansa Bailout
(Bloomberg) -- The German government worked out its differences with the European Commission over a 9 billion-euro ($9.9 billion) bailout of Deutsche Lufthansa AG, clearing the way for the rescue of Europe’s biggest airline to move forward.After intense talks, the commission and the German government agreed that Lufthansa will reduce its presence at airports in Frankfurt and Munich by four aircraft each. The accord, which the airline’s management said it would accept, would give a toehold to new competitors hoping to challenge the dominant German carrier on its home turf.The compromise settles a high-stakes showdown that played out over the past week, pitting the European Union’s most powerful member state against the regulator tasked with ensuring fairness in the bailout process. The economic damage of the coronavirus crisis has unleashed an unprecedented gusher of state aid, led by Germany’s 600 billion-euro ($666 billion) effort to shore up its economy.With Lufthansa’s future in the balance, Germany on Monday offered the carrier a package of loans and equity investment to keep it aloft. But after the EU demanded it give up slots, the airline’s supervisory board unexpectedly held off on accepting this lifeline -- throwing the rescue plan into turmoil after weeks of talks. Ultimately, the EU pared back some of its demands.“There will be worries for Lufthansa about other airlines moving in, but the slot rules would seem to limit the threat,” said John Strickland, director of JLS Consulting in London, who has held senior positions at British Airways and KLM.The EU conditions kick in when airports become congested again, at which point Lufthansa will have to surrender as many as 24 takeoff-and-landing slots at Munich and the same at Frankfurt -- enough for a competitor to base four planes at both airports, each making three daily round-trips.Assessing the DealThere are significant catches, however, that suggest the strongest potential beneficiaries, such as Ryanair Holdings Plc -- a loud critic of the Lufthansa aid -- won’t be able to fully take advantage of the slots.For the first 18 months, for example, the capacity is reserved for new competitors in Frankfurt and Munich. With the global airline industry in retreat, the likelihood of a fresh entrant may be limited.The EU is comfortable with the deal, having overshot in its initial demands in anticipation of a compromise, according to a person familiar with the matter. It’s not certain the remedy will be taken up, but regulators didn’t have time to test the interest, the person said, asking not to be identified on a confidential matter.The commitments will “enable a viable entry or expansion of activities by other airlines at these airports to the benefit of consumers and effective competition,” the EU said in an emailed statement.Talks with the EU over other aspects of the deal will continue, a spokeswoman for Germany’s economy ministry said.The agreement would then require approval of Lufthansa’s supervisory board, followed by a formal signoff by the EU, which polices state aid to ensure one country doesn’t give its companies an unfair advantage.The bloc’s regulators will assess the German aid package “as a matter of priority,” the EU said Saturday.Ryanair, WizzDiscount operators are the most likely to show interest in the new capacity, Strickland said. If the slots had become available before the coronavirus, Lufthansa “would have been concerned about long-haul rivals -- Gulf carriers say -- but that’s really gone now with markets so weak.”Of the two main European discounters, Dublin-based Ryanair already has slots at Frankfurt’s main airport. U.K.-based Easyjet Plc has a presence in Munich. At least initially, each would be unable to use the new capacity in the location where it’s already planted a flag.Another growing low-cost carrier, Wizz Air Holdings Plc, recently pulled out of Frankfurt. In an interview, Chief Executive Officer Jozsef Varadi called the bailout “market distorting,” and said the slots don’t come close to balancing out the amount of aid Lufthansa is getting.He said he’ll consider the capacity on offer, but cautioned it will depend on details including costs, which are higher for point-to-point operators like Wizz because of transfer discounts granted in Frankfurt.“We need to look at whether there is any way of taking advantage of this,” Varadi said. “We need to know more about the process of applying for the slots and what the conditions are, and also what slot pairs we are talking about, the time of day, the rotations.”The slot pairs will be allocated in a bidding process, Lufthansa said, and only be available to European carriers that haven’t received substantial state recapitalization due to the coronavirus pandemic.Market PowerThe supervisory board’s rejection of the initial rescue proposal had triggered an open dispute between the German government and the EU commission, revealing the political tensions underpinning the effort to stabilize Lufthansa in the midst of a historic collapse in travel.The labor-heavy supervisory board saw a threat that jobs would be lost and the market would shift toward the discount airlines, which pay their personnel less.Still, all sides were seeking a breakthrough. Even before the compromise, the board had called the bailout “the only viable alternative for maintaining solvency.”Read more:Vestager Defends Tough Stance on Lufthansa Amid Jobs WarningBailout-or-Bust Dilemma Forces Lufthansa to Call in State RescueMerkel Is Seizing Her Chance to Revolutionize Germany’s Economy“Lufthansa is indeed a very impressive company and they have market power,” EU competition watchdog Margrethe Vestager told reporters in Brussels on Friday. “There is a high risk that if you hold market power” that “competition will be disturbed,” especially when state recapitalizations strengthen a company.The supervisory board wasn’t planning to meet this weekend, but could be called to do so at short notice, people familiar with the matter have said. It may meet on Monday, German newspaper Handelsblatt reported.Shareholder VoteLufthansa’s shareholders would also be called to vote on a proposed capital increase that’s part of the rescue plan at an extraordinary general meeting, most likely toward the end of June, meaning it could be weeks before Lufthansa receives government cash.Like airlines across the world, Lufthansa is fighting for survival as the coronavirus crisis punctures a decades-long aviation boom. The company, which connects Germany’s industrial titans to far-flung export markets, plans to operate fewer aircraft when flights resume and is closing discount arm Germanwings to prepare for what could be years of depressed demand.Lufthansa is also poised to receive some 2 billion euros in aid from Austria, Belgium and Switzerland, where the airline owns units.The German package represents the biggest corporate rescue in the country during the pandemic crisis. It’s also the only one that involves a direct investment by German Chancellor Angela Merkel’s government, but more may be coming. The government set up a 100 billion-euro fund to buy stakes in stricken companies as part of its effort to stabilize Europe’s largest economy.(Updates with consultant’s comments in fifth 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
Long Overdue, Berlin’s New Airport Is Still Worth Celebrating
(Bloomberg Opinion) -- Too bad I didn’t keep our plane tickets from 2012 as souvenirs. They showed us departing from Los Angeles (LAX) and arriving at Berlin Brandenburg Airport (BER), which was just about to open. But the launch, already delayed the previous year, was again called off at the last minute. So we landed instead at the charming but small Tegel airport (TXL) that dates back to the early Cold War.Over the years, other opening dates came and passed for BER, owing to construction flaws, from failing fire-safety vents to elevators too short for their shafts. Now, though, in a triumph of hope over experience, Berliners are daring to get excited once again about what’s been called their “phantom airport.” Tegel, largely cobwebbed since the Covid-19 outbreak, will start shutting down in June, and BER is actually ready to open in October. It’s ironic, of course, that Berlin is finally bringing its new airport online just as a pandemic is keeping most people from checking in.And yet BER is still worth celebrating, if only as a symbol. That’s because the tale of Germany’s runways and terminals also reflects the country’s dramatic history. Each former and current airport has a chapter in the story of a nation that used to be aggressive, tragic and divided, before becoming successful, rich and reunified. In a sense, the opening of BER confers closure on a traumatic past and marks the beginning of something resembling normality.There was a time, in the roaring 1920s, when Berlin’s oldest airport, located in Tempelhof near the city center, was actually Europe’s busiest. Then Adolf Hitler took over and rebuilt Tempelhof in the 1930s to fit his Nazi visions. A few years later, the city, country and continent lay in ruins, and the Americans took Tempelhof as theirs.Soon Tempelhof got itself a new and more heroic image. It was where American, British and French “raisin bombers” landed — every 30 seconds at one point — during the Berlin blockade of 1948-1949, to feed a population that was entirely surrounded by the Soviets.Even after the airlift prevailed, however, it was clear that German aviation during the Cold War would take new routes. Until 1990, only the airlines of the three Western allies — such as Pan Am, British Airways and Air France — were allowed to fly to West Berlin. Although the Americans kept some of the glamor of Tempelhof and the French expanded Tegel, Berlin had changed from a capital to a sideshow.So the action moved to West Germany. The region of Hesse grasped that, being in the middle of the country’s new geography, it could turn Frankfurt, often called Germany’s “secret capital,” into a continental traffic node. This had a certain economic and historical resonance. In the Middle Ages, emperors had been crowned here; later, it was where Rothschilds built financial dynasties. By the 1960s Frankfurt was becoming “Bankfurt,” a sort of German Wall Street. It was a promising place for an airport, and Lufthansa, the German flag carrier, gradually made FRA its hub.As West Germany’s postwar economy boomed, other metropolises and their airports also thrived. Stuttgart (STR) benefited from serving the Swabian heartland of Germany’s vaunted Mittelstand of family-owned firms. The main airport in the populous Rhineland is Duesseldorf (DUS), which by the late 1970s took second place behind FRA for a while.But the real success story was Munich. In the immediate postwar era, Bavaria was an economic backwater. This changed, as successive state leaders, most notably Franz Josef Strauss between 1978 and 1988, hewed to traditional culture while also wooing cutting-edge companies and entrepreneurs, a strategy later dubbed “laptops and lederhosen.”A centerpiece of this effort was a new airport, named after Strauss. The old one, Riem, was cramped and gloomy. The new one, MUC, which opened in 1992, was light-swept and transparent but still easily navigable and cosy — a perfect architectural expression of what the newly reunified Germany strove to be. MUC became a second hub for Lufthansa.At the same time, the decision was made to move the federal government from Bonn back to Berlin. So, during the 1990s, planning began for an airport appropriate to Berlin’s new role, while Tegel and Schoenefeld (SXF), formerly used by the East Germans, kept handling the booming traffic. Tempelhof, used mainly by smaller planes in its final years, was eventually closed in 2008. Today its runways are a Mecca for kite-landboarders.But even as these old names fade into history and the long-awaited BER takes over, Berlin won’t ever recapture its prewar dominance. Like the U.S. but unlike France, say, Germany is decentralized in its politics, economy and transportation infrastructure. The country has many competing hubs.To pessimists, BER symbolizes Germany’s bad developments. Its highly publicized bureaucratic and engineering fiascoes have dented the country’s former reputation — not always entirely flattering — of being relentlessly meticulous and punctual. The subtext is that Germany, whether it’s building airports or algorithms, is increasingly leaving economic dynamism to others, especially China.To optimists, this too is part of Germany’s long historical arc to “normality.” Germans today are more relaxed about their national identity and place in the world than they’ve ever been. That explains why they’ve also been nonchalant about BER’s travails. The truth is, many Germans have secretly been savoring the airport headlines as a font of gossip. Many an awkward dinner party has been saved by boozy debates about whether humans would set foot on Mars before disembarking at BER, or whether it would be more cost-effective to rebuild the capital near a working airport.Even the coincidence that BER is now opening in 2020, the annus horribilis of Covid-19, may turn out to be unexpectedly appropriate. Experts have been worrying all along that the airport would already be too small when opened. The pandemic has taken care of that. As Lufthansa enters a government rescue program and people shy away from flying, Berlin’s airport could turn out to have just the right proportions. That, too, is worth raising a glass to.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andreas Kluth is a columnist for Bloomberg Opinion. He was previously editor in chief of Handelsblatt Global and a writer for the Economist. He's the author of "Hannibal and Me." For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Reuters
Lufthansa accepts tweaked demands by Brussels over state bailout
Lufthansa's management board has accepted a more favourable set of demands from the European Commission in exchange for approval of a 9 billion euro ($10 billion) government bailout, the carrier said on Saturday, paving the way for its rescue. The agreement comes after the airline's supervisory board on Wednesday rejected an initial deal with Brussels including conditions that were significantly more painful. Lufthansa and the rest of the airline sector have been hard hit by what is expected to be a protracted travel slump due to the coronavirus pandemic.
- EQS Group
Deutsche Lufthansa AG: Agreement on Lufthansa's stabilization package
Deutsche Lufthansa AG / Key word(s): Financing Deutsche Lufthansa AG: Agreement on Lufthansa's stabilization package 30-May-2020 / 00:04 CET/CEST Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014, transmitted by DGAP - a service of EQS Group AG. The issuer is solely responsible for the content of this announcement. * * *At its meeting today, the Lufthansa Executive Board decided to accept the commitments offered by Germany to the EU Commission for the stabilization package negotiated with the Economic Stabilization Fund (WSF) of the Federal Republic of Germany.The scope of the conditions required in the EU Commission's view has been reduced in comparison with initial indications. Lufthansa will therefore be obliged to transfer to one competitor each at the Frankfurt and Munich airports up to 24 take-off and landing rights (slots), i.e. three take-off and three landing rights per aircraft and day, for the stationing of up to four aircraft. For one and a half years, this option is only available to new competitors at the Frankfurt and Munich airports. If no new competitor makes use of this option, it will be extended to existing competitors at the respective airports.The slots will be allocated in a bidding process. The slots can only be taken over by a European competitor that has not itself received any substantial state recapitalization as a result of the corona pandemic.The Supervisory Board must approve the stabilization package negotiated with the WSF, including the commitments to the EU Commission. Subsequent to the Supervisory Board's decision, the company intends to convene an Extraordinary General Meeting in the near future to obtain shareholder approval for the WSF stabilization measures. Responsible: Dennis Weber, Head of Investor Relations, Phone +49 69 696 28000* * *30-May-2020 CET/CEST The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Archive at www.dgap.de * * * Language: English Company: Deutsche Lufthansa AG Venloer Str. 151-153 50672 Cologne Germany Phone: +49 (0)69 696 28000 Fax: +49 (0)69 696 90990 E-mail: investor.relations@dlh.de Internet: www.lufthansagroup.com/investor-relations ISIN: DE0008232125, DE0008232125 WKN: 823212 Indices: DAX Listed: Regulated Market in Dusseldorf, Frankfurt (Prime Standard), Hamburg, Hanover; Regulated Unofficial Market in Tradegate Exchange EQS News ID: 1059523 End of Announcement DGAP News Service
- Reuters
EU's Vestager denies making Lufthansa bailout more difficult
EU antitrust chief Margrethe Vestager denied on Friday that she was putting hurdles in the way of Lufthansa's $10 billion government rescue, saying companies getting big capital injections from the state have to offset their competitive advantage. Vestager wants Lufthansa to permanently give up some take-off and landing slots at Frankfurt and Munich airports, where it commands a two-thirds market share, in return for giving the green light to the German government taking a 20% stake in the airline. Lufthansa's board, however, has rejected her demands.
BloombergMerkel’s Quiet Revolution
May.29 -- Germany is undergoing a quiet revolution. Angela Merkel is seizing her chance to revolutionize Europe’s largest economy. The coronavirus pandemic has revived a radical plan to transform Germany into a state capitalist with echoes of France and China. With infection rates surging and stringent restrictions on people and businesses, there is little time for debate and no serious opposition to a plan that one of Merkel’s chief advisors had drawn up a year beforehand. Bloomberg’s Birgit Jennen reports on “Bloomberg Markets: European Open.”
- Reuters
German official sees Lufthansa bailout in reach, demands fairness
The Berlin government is likely to reach a deal with Brussels on a $10 billion (8.1 billion pounds) government bailout of stricken airline Lufthansa <LHAG.DE>, senior government official Thomas Jarzombek said on Friday, but stressed the German airline needed fair treatment. The deal was thrown into doubt on Wednesday after Lufthansa's supervisory board refused to accept the conditions attached by Brussels to the aid. The board did not agree with EU requirements that Lufthansa permanently give up take-off and landing slots at Frankfurt and Munich airports, where it commands a two-thirds market share.
- Bloomberg
Germany Duels With EU Over $9.9 Billion Bailout for Lufthansa
(Bloomberg) -- The German government bristled at the European Commission’s antitrust demands on its 9 billion-euro ($9.9 billion) bailout of Deutsche Lufthansa AG, in a sign of rising tensions over the stalled aid package.The insistence by officials in Brussels that Lufthansa ditch some of its takeoff-and-landing slots in Frankfurt and Munich is unfair, German Transport Minister Andreas Scheuer told Germany’s Bild newspaper late Wednesday.“The European Commission doesn’t do this with other airlines,” Scheuer said in comments to the newspaper, citing Italy’s plan to nationalize Alitalia SpA as an example.Concerns that European Union requirements would hit Lufthansa’s business led the airline’s supervisory board to unexpectedly hold off on accepting the German lifeline on Wednesday, throwing the rescue plan into turmoil after weeks of talks. The labor-heavy board sees a threat that jobs would be lost and the market would shift toward discount airlines that pay less.The stalemate has taken Lufthansa’s crisis to a new level of urgency, with Germany’s government trying to square clear-cut EU rules with governance dynamics at the airline. In the balance is the arrival of much-needed funds. Chief Executive Officer Carsten Spohr warned employees Wednesday that the airline would struggle to pay wages in June if it can’t get hold of the bailout cash, according to a person familiar with the matter.Aid TermsThe German aid package unveiled on Monday involves the state taking an initial 20% stake in Lufthansa that could rise to a blocking minority of 25% plus one share in the event of a hostile takeover. The support also includes a 5.7 billion-euro investment via a so-called silent participation, and a three-year loan of 3 billion euros.The prospect of Germany becoming Lufthansa’s biggest investor has raised concerns in Brussels that the airline, backed by such a powerful shareholder, would increase its dominance over the aviation market.The EU defended tougher conditions for the recapitalization than for a loan. The capital infusion “does not increase the debt exposure of the company and ensures that the company is supported by a strong shareholder,” the EU said on Wednesday.German government officials concede in private that Lufthansa will need to give up a sizable amount of capacity in Germany to secure the European Commission’s blessing. Lufthansa could also be asked to cut back 20 planes in Germany, a person familiar with the matter said Wednesday.Lufthansa, along with its subsidiaries, dominates slot allocation at the two Frankfurt and Munich hubs. Germany’s DLR aerospace center has estimated the group has a two-thirds share of the nation’s commercial aviation market.Shareholder VoteThe airline opted against immediately calling a shareholder vote and said the proposal will be reviewed, citing a need to analyze the economic hit, the repayment of the aid and possible alternative scenarios. Lufthansa’s employee representatives, holders of half the votes on the supervisory board, are also fiercely opposed to the European Union demands on slot disposals.“The 140,000 jobs at Lufthansa cannot be endangered through nonsensical and competition-distorting demands,” Markus Wahl, president of the VCI pilots’ union, said in an emailed statement.Read more on the airline crisis:EasyJet Shrinks After Virus Brings Abrupt End to Years of GrowthSAS Warns Shareholders It Needs More Money as 5,000 Jobs CutRyanair Maps Growth With 737 Max Jets While Rivals ShrinkStill, the bailout remains “as the only viable alternative for maintaining solvency,” according to the board. But the holdup underscores the political tensions underpinning the effort to stabilize Europe’s largest airline in the midst of a historic collapse in travel.The delay comes with Lufthansa severely weakened by the coronavirus crisis. The carrier has just weeks of liquidity remaining before it runs out of cash, according to people familiar with the matter. The proposed bailout requires shareholder and EU approval before the funds can be distributed, a process that could take several weeks even without the new delay.The supervisory board is expected to meet again to discuss the package once it has more information on the slots matter. The airline can call a meeting at short notice, meaning it could still approve the deal this week.‘Ungrateful Lufthansa’Germany is separately seeking EU assurances that any deal put to shareholders is compliant with state-aid rules, the people said. It wants a so-called comfort letter from regulators to offer legal clarity on financial aspects before the EU approves the deal, one person said. That would not cover the dispute over slots.Merkel said Wednesday that talks regarding Lufthansa are ongoing. Spokespeople at the airline and in Germany’s Economy Ministry declined to comment.Ryanair Holdings Plc, Europe’s largest low-cost carrier, criticized Germany’s rescue effort as an “illegal state aid scheme, which the ungrateful Lufthansa has clearly rejected.”A decision by the German airline to hand over slots in Frankfurt and Munich would boost competition, Ryanair said in a statement.“If the German government is serious about restarting air travel to and from Germany, then this state aid should be replaced with a different scheme, which would reduce air travel taxes for all airlines operating in Germany for the next 24 months,” Dublin-based Ryanair said.(Adds chart to previous version)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.
- Zacks
Airline Stock Roundup: LTM Files for Bankruptcy Protection, DAL, RYAAY in Focus
The likes of Delta (DAL) and United Airlines (UAL) are looking at ways to promote cleanliness in a bid to encourage passengers to resume flying.
