Lufthansa’s has agreed the €9bn stabilisation package offered by the German state’s Economic Stabilisation Fund (WSF) which involves selling aircraft slots at Frankfurt and Munich airports as required by the European Commission.
Karl-Ludwig Kley, Chairman of the Supervisory Board of Deutsche Lufthansa, said: “It was a very difficult decision. After intensive discussion, we have come to the conclusion to agree to the Executive Board’s proposal.
“We recommend that our shareholders follow this path, even if it requires them to make substantial contributions to stabilizing their company. It must be clearly stated, however, that Lufthansa is facing a very difficult road ahead.”
The German flag carrier’s board last week postponed agreement on the deal because of concerns that the European Union regulator’s conditions would weaken carrier’s hub function at Frankfurt and Munich airports.
However, the scope of the conditions required by the Commission in Brussels had been reduced in comparison with initial indications.
Lufthansa will still be obliged to transfer to one competitor each at the Frankfurt and Munich airports up to 24 take-off and landing rights (slots), i.e. three take-off and three landing rights per aircraft and day, for the stationing of up to four aircraft.
This option is available only to new competitors at the two key German hub airports for 18 months. If no new competitor makes use of this option, it will be extended to existing competitors.
The slots will be allocated in a bidding process. The slots can only be taken over by a European competitor that has not itself received any substantial state recapitalisation as a result of the Covid-19 pandemic.
The Executive Board of Deutsche Lufthansa AG already formally approved the package on Friday, 29 May 2020.
Carsten Spohr, Chairman of the Executive Board of Deutsche Lufthansa, said today: ”Stabilizing our Lufthansa is not an end in itself. Together with the German government, it must be our goal to defend our leading position in global aviation.
“We are grateful to all those involved in the stabilization process, including our customers, employees and shareholders for this perspective. We will not disappoint them and will now work hard to ensure the competitiveness and future viability of our airline group.
“The expected slow market recovery in global air traffic makes an adjustment of our capacities unavoidable. Among other things, we want to discuss with our collective bargaining and social partners how the impact of this development can be softened in the most socially acceptable way possible.”
Now that the Executive Board and the Supervisory Board have approved the stabilization package, it still requires the approval of the competition authorities and shareholders. The loans and deposits committed to stabilization are to be repaid as soon as possible subsequently.
Deutsche Lufthansa will invite its shareholders to an extraordinary General Meeting on 25 June 2020. The meeting will be broadcast for shareholders in a livestream on the company’s website.
Shareholders will have the opportunity to submit questions in advance. Shareholders who have registered in advance for the online services will also be able to participate in the voting, for which advanced electronic options are available.
The agenda of this extraordinary General Meeting will deal exclusively with the stabilization measures negotiated with the WSF. In order to secure the solvency of the company, the approval with a necessary majority at the General Meeting is required.
The Executive Board will discuss the current status and the necessary measures in Germany in a top-level meeting with the unions Verdi, Vereinigung Cockpit and UFO.
The interim report for the first quarter is scheduled for publication on 3 June, 2020.
