Lufthansa CEO pitches $6.6b capital increase to investors

Bloomberg

Deutsche Lufthansa AG asked shareholders for permission to raise 5.5 billion euros ($6.6. billion) in fresh capital, calling it a necessary step to repair the stricken carrier’s balance sheet after the coronavirus pandemic punctured a decades-long boom in air travel.
At the airline’s annual meeting on Tuesday, Chief Executive Officer Carsten Spohr implored investors to back the motion, which would authorise the issuance of 2.15 billion new shares at the nominal price of 2.56 euros each, about one-fourth Lufthansa’s current stock price. The company said last week it wouldn’t use the full amount available, and instead aim for the “smallest possible” raise.
“The resolution is intended to enable us to increase our capital flexibly so that we can strengthen our balance sheet ratios again and return to our former financial stability,” Spohr in a speech to shareholders.
The move would give Europe’s largest airline enough cash to replace Germany’s so-called silent participation, a major part of Lufthansa’s 9 billion-euro government bailout. The interest rates on the instrument — a debt-equity hybrid that doesn’t dilute shareholder voting rights — are set to rise over coming years.
A simple majority is required for the motion to pass. The airline said it hasn’t decided when to undertake the capital raise, but could do so this year if market conditions allow.
Last week, Lufthansa became the latest carrier to lower its expectations for summer travel, saying a significant market recovery won’t come until the second half as inoculation programs progress. It estimates full-year capacity at around 40% of pre-crisis levels.
The company said that it restructured aircraft delivery schedules with Airbus SE and Boeing Co, while agreeing to purchase 10 additional wide-body jets.

Airlines face another summer writeoff as virus barriers persist
Bloomberg

Airlines should brace for another harsh summer season with demand for travel not likely to pick up until the second half of the year at the earliest, according to an analysis by Midas Aviation.
What’s usually the busiest time for vacations is likely to be as quiet as 2020, when plans for a significant recovery from the early months of the coronavirus pandemic never materialised, said John Grant, partner at Midas. Carriers are expected to slash two-thirds of the seats they currently have scheduled for the coming months, according to the report.

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