Germany’s struggling carrier Lufthansa agrees to $10 billion state rescue package

Germany’s struggling carrier Lufthansa agrees to $10 billion state rescue package

Lufthansa, which has lost most of its passenger business due to travel restrictions during the outbreak, said the government's fund has agreed to take non-voting holdings in return for 5.7 billion euros, plus a 3 billion-euro credit line and 300 million euros in share purchases.

Conditions of the deal include the waiver of future dividend payments and limits on management pay, Lufthansa said, adding that the government will also fill two seats on its supervisory board, with one becoming a member of the audit committee.

Berlin "is not bringing state influence into Lufthansa's operational areas, quite the opposite. Lufthansa is a successful company and should be led by businesspeople in future as well", Economy Minister Peter Altmaier told reporters in Berlin. The WSF will hold a total of 20 percent of the company's share capital, which can be increased to 25 percent.

Germany's Finance Ministry and Economic Affairs Ministry said on Monday that Lufthansa, whose shares closed up 7.5 percent at 8.64 euros ($9.42), had been operationally healthy and profitable with good prospects, but had run into trouble because of the pandemic.

Required approvals from Lufthansa's executive and supervisory boards are widely seen as a formality.

German newspaper Handelsblatt reported that Chancellor Angela Merkel had said Berlin would fight to ensure that remedies were not too stringent.

The deal must now be approved by Lufthansa's advisory board as well as various governing bodies including the European Commission. The Lufthansa Group owns the low-priced Eurowings and Germanwings airlines, as well as Austrian Airlines, Brussels Airlines and SWISS and Edelweiss Airlines.

In April, the company had said it was losing around €1 million an hour.

Bild am Sonntag first reported the new destinations.

Lufthansa at the weekend confirmed reports that it plans to double its active fleet to around 160 aircraft in the coming weeks and add popular German holiday destinations back onto its much-reduced flight plan.

Meanwhile, the majority of some 760 Lufthansa planes will remain on the ground.

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