With $9.8 billion lifeline, Germany stamps the Lufthansa power.
On Monday, Germany threw Lufthansa a lifeline of EUR 9bn ($9.8bn) in agreement on a bail-out that would veto Berlin in the case of a hostile offer to the airline.
As a consequence of the coronavirus outbreak, the biggest German Corporate Rescue program would see a 20 % stake for the government and could hit 25% plus 1% as it tries to retain thousands of workers.
For weeks Lufthansa has been in discussions with Berlin about helping it to survive a provisionally prolonged travel slump with the airline challenging how much control it can control in return for financial assistance.
Germany is now the major partner of past public utilities, such as Deutsche Post and Deutsche Telekom. The Central Government has spent decades discharging stakeholds of businesses. The Commerzbank, which it took up during the global financial crisis, is still holding 15% in Berlin.
Other airline companies, like Franco-Dutch Air France-KLM and American Airlines, United Airlines and Delta Air Lines, also sought state support following the global hit of coronaviruses.
The Ministries of Finance and Economics said Monday that Lufthansa was operationalally healthy and profitable, with a good outlook and a 7.5% increase in its share of 8.64 euro.
The finance minister Olaf Scholz said of the contract, according to which Germany buys new shares with a cumulative nominal value of 2,56 euros each for about 300 million euros. "This funding is being planned for a limited time."
Berlin, which has launched a EUR 100 billion fund for companies affected by the crisis with coronavirus, says that by the end of 2023 it plans to sell the Lufthansa stake.
"The state will sell its stake and hopefully when the company is fit again ... With a small profit that enables us to finance the many, many requirements, not only for this enterprise, which we have to fulfill now, "added Scholz.