Lufthansa airline to get lifeline of $10bn deal

Following a significant decline in its first quarter (Q1) financial report, occasioned from the impact of the coronavirus pandemic, Lufthansa airline may soon receive a whopping 9 billion-euro ($10 billion) bailout by the German government.

This is because the Deutsche Lufthansa AG’s supervisory board has backed the bailout, paving the way for the airline to receive the lifeline should investors approve it.

The move, however, becomes more necessary as the firm cash reserves dwindling, the board, therefore, voted in favour of the plan and called an extraordinary shareholder meeting for June 25.

Although, it was, reported that the approval was unexpectedly delayed last week after members baulked at European Union demands for slot disposals, a matter resolved in a deal sealed late Friday.

It was, however, reported that investors now face a choice between a capital hike that will dilute their holdings, or tipping Europe’s biggest airline toward insolvency. Lufthansa’s management has told German officials and labour representatives that it will run out of cash on June 15, people familiar with the matter have said.

Commenting on this development, Supervisory Board Chairman, Karl-Ludwig Kley, in a statement said, “We recommend that our shareholders follow this path, even if it requires them to make substantial contributions to stabilizing their company.

“The final accord had been “a very difficult decision” involving “intensive discussion”, he added.