German carrier Lufthansa was saved at the 11th hour on Wednesday, after its top shareholder stepped in backing a 9-billion-euro rescue package put up by Germany’s Economic Stabilisation Fund (WSF).
German billionaire Heinz Hermann Thiele told Frankfurter Allgemeine Zeitung newspaper that he would “vote for the agreement” one day before today’s extraordinary general meeting to determine the future of the airline.
The board has repeatedly warned shareholders that insolvency is “unavoidable” should the bailout was rejected.
Owning 15.5 percent of Lufthansa’s stock, Hermann said he had doubts about the rescue plan but insisted that insolvency had to be avoided at all costs.
Earlier this week, the Commission said it had approved German plans to contribute 6 billion euros to the recapitalization of Deutsche Lufthansa AG (DLH) to help Lufthansa weather the coronavirus crisis.
Photo Source: Lufthansa Group
The German carrier suffered a massive blow after the coronavirus (Covid-19) pandemic brought travel to a standstill. As part of its commitment, Lufthansa will have to surrender eight aircraft in Frankfurt and Munich airports 24 take-off and landing slots to competitors.
“It is in the interest of all Lufthansa employees that management can quickly begin talks about the necessary restructuring,” Thiele said, expressing his concern over the size of the German’s government’s stake.
The rescue plan foresees the state claiming a 20 percent stake.
Despite the bailout efforts however, Lufthansa has said that it still may be forced to cut thousands of jobs due to declining demand for travel in the aftermath of Covid-19.
The company did however enter an agreement with the German flight attendants’ union on Wednesday, by which it will cut 500 million euros in costs by 2023 in order to prevent cabin crew layoffs.
In the meantime, Lufthansa shares jumped by nearly 16 percent on the news.
