Lufthansa rescue package worth €9 billion approved by German government

Lufthansa Airbus A320 grounded at Munich Airport. Photo: © Phillip Rohmberger / IFN

The German government has approved stabilisation measures for flag-carrier Lufthansa, worth up to €9 billion (US $9.8 billion).

This aid through the Economic Stabilization Fund (WSF) of the Federal Republic of Germany will see the country invest €5.7 billion into the airline and receive assets in return. The WSF will hold a total of 20 percent of the company’s share capital, which can be increased to 25 percent. Unless in the event of a takeover, the WSF does not intend to exercise its voting rights that come with the shares.

A further €3 billion will be provided to Deutsche Lufthansa AG in the form of a loan issued by state-owned development bank KFW, as well as private banks.

Two seats on the airline’s Supervisory Board will be filled in agreement with the government.

Lufthansa says the Executive Board is in favour of the rescue package. However, the agreement is still pending formal approval through the company’s Executive and Supervisory Boards, as well as the European Commission and other regulative authorities.

On Thursday, the German airline Group had first officially confirmed that it is in talks for government support, valued at up to €9 billion. It is heavily hit by the ongoing Coronavirus crisis that has led to travel restrictions around the world and therefore slashed demand for flights.

Read more: Lufthansa Group set to ramp-up flight services in June