Dhaka: The national carrier Lufthansa eyes to finalise a state aid rescue package worth up to USD 10.8 billion next week after the coronavirus crisis forced it to ground almost all of its planes, according to reports.
The package will consist of equity from Germany’s new economic stabilisation fund (ESF), state-guaranteed loans from Germany and debt supplied by Austria, Switzerland and Belgium, where Lufthansa subsidiaries are based, the reports added.
Lufthansa is in intensive negotiations with the governments regarding various financing instruments to secure the group’s solvency in the near future, Lufthansa said as it reported a first-quarter loss of USD 1.3 billion late on April 23.
Carsten Spohr, CEO of the airline this month said that Lufthansa would seek state aid in Germany, Austria, Switzerland and Belgium, citing cash burn at a rate of USD 1 million per hour, meaning its USD 4 billion cash reserves will be inadequate.
The equity injection from the ESF — possibly up to USD 4 billion — could initially come as a non-voting form of capital dubbed “silent participation”, reports said, adding that some or all could be converted into shares at a later stage.
Roughly USD 5 billion in loans, 80 per cent guaranteed by German state bank KfW, could be part of the package, they said, adding that Austria, Switzerland and Belgium could contribute a combined USD 1 billion to USD 1.5 billion.
The three countries are pushing for their individual hubs to be strengthened if they participate in the rescue.
“The exact portions of the different pots of money are still in flux,” another report stated.
The German government is expected to present its proposal to Lufthansa this week, with talks to be finalised next week, the sources said, adding that it is sure to include fresh equity.
Lufthansa currently has a market capitalisation of USD 4 billion and its shareholders would need to approve any large capital increase.