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Bloomberg
Deutsche Lufthansa AG’s biggest stockholder publicly backed a 9 billion-euro ($10 billion) government bailout, giving the rescue plan a major shot of momentum and boosting the airline’s shares and bonds just before a crunch vote.
With Heinz Hermann Thiele declaring support after days of frenzied speculation about his intentions, the state rescue appears likely to secure the two-thirds backing required at Thursday’s special shareholders meeting. The German billionaire who had earlier criticised the conditions held the votes to single-handedly stop the deal and plunge Europe’s largest airline into turmoil.
A failure of the landmark bailout, which featured the state buying a heavily discounted 20% stake in the airline, would also have been a serious blow to Chancellor Angela Merkel’s efforts to take a more activist approach to managing Germany’s economy. Thiele eased those concerns by saying he “will vote in favor†of the plan at the meeting, according to an interview with Frankfurter Allgemeine Zeitung published on its website.
Because only 38% of shareholders registered for the online meeting, Thiele’s 15.5% stake translates into about 41% of the votes. Lufthansa needs to win about half of the rest for the share sale to pass. It’s only part of the larger bailout package that also includes state loans and a so-called silent participation.
Approval of the deal would bring the curtain down on weeks of high-stakes drama that buffeted Lufthansa’s stock and bonds and forced it to examine insolvency. It would also thrust the state back into the heart of a company that was privatised with fanfare two decades ago.
The news of Thiele’s support also triggered a sharp rally in Lufthansa debt, with the company’s euro bonds maturing in 2024 jumping the most on record to trade as high as 90.2 cents on the euro. The airline’s bonds have been under pressure since March and a sell-off accelerated when the company lost its investment-grade rating at S&P.
The virtual meeting was about to start at 12 pm in Frankfurt. CEO Carsten Spohr, who’s fighting for the airline’s survival, was expected to address shareholders before opening the floor to questions.
In another step forward the deal, Lufthansa won European Union approval for a 6 billion-euro recapitalisation plan, the bulk of the financing in the rescue plan. To ease competition concerns, the airline has committed to make slots available at its Frankfurt and Munich hubs.