Germany will offer Lufthansa a €9bn bailout in return for a 20% stake two decades after the airline was privatised with much fanfare.
The aid package involves taking an initial 20% stake that could rise to a blocking minority of 25% plus one share in the event of a hostile takeover, the carrier said. The plan, which requires EU approval and will almost certainly be challenged by rival airlines such as Ryanair, gives Germany an effective veto over company strategy.
German Finance Minister Olaf Scholz said the state’s investment would be temporary, but he also stressed that the timing of an exit would depend on the pace of Lufthansa’s economic recovery.
“When a state spends that much money, it has the obligation to make sure that this investment does not come at the taxpayers’ expense,” Mr Scholz said.
Like airlines the world over, Lufthansa is fighting for survival as restrictions to contain the coronavirus puncture a decades-long aviation boom. The company plans to operate fewer aircraft when flights resume and is closing discount arm Germanwings to resize for what it warns could be years of depressed demand.
The package represents the biggest corporate rescue in Germany during the pandemic crisis. It’s also the only one that involves a direct investment by Chancellor Angela Merkel’s government, but more may be coming.
The German government set up the €100bn fund to buy stakes in stricken companies as part of its effort to stabilise Europe’s largest economy.