Silent applause

21 May 2020 By Ed Cropley Follow @edwardcropley

The German flag carrier will get a 9 bln euro bailout, including new shares and non-voting stock. The government gets a 25% stake on the cheap, and a more generous payout than other investors. Shareholders can at least be grateful that politicians are staying out of the cockpit.

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Airline Deutsche Lufthansa said on May 21 it was in “advanced discussion” with the German government over a 9 billion euro bailout.

German state bank KfW will lend Lufthansa 3 billion euros. The rest of the package will be split between a so-called silent participation, a capital increase and a convertible bond, all provided by Germany’s Economic Stabilisation Fund, WSF.

The capital increase will give the government a 20% stake in Lufthansa, while the convertible bond can be exchanged for shares totalling another 5% of the group’s voting stock.

The WSF said it would only fully exercise its voting rights “in exceptional circumstances, such as protection against a takeover”.

Lufthansa shares were up 5.3% at 8.34 euros by 0758 GMT on May 21.

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