Lufthansa expects to reach pact on government aid soon

Bloomberg

Deutsche Lufthansa AG’s management will face investors on Tuesday as the company races to finalise terms of a multibillion-euro bailout from the German government.
Over the weekend, Chief Executive Officer Carsten Spohr told employees that the discussions are moving towards a conclusion. The bailout is expected to stretch to 10 billion euros
($11 billion), with the state likely to receive a blocking minority of voting rights in the airline group, according to people familiar with the matter.
The shares fell about 2.5% as of 9:34 am on Monday in Frankfurt. Lufthansa has lost about half its value since the start of the year.
An agreement between the company and government officials is expected to be in place in the next few days or early next week, according to a person familiar with the matter. Financing would ease intensifying pressure on Lufthansa, which in late April warned it would run low on
cash within weeks after measures to contain the coronavirus grounded most of its fleet. The airline’s pilots union has called on management to reach a deal.
“Aid by governments is also important to resume flight operations as soon as circumstances allow,” Lufthansa’s management said in a letter to the airline’s staff reviewed by Bloomberg News.

Worldwide Grounding
The airline, faced with a substantial loss in revenue, will host its annual general meeting online on Tuesday, with management to update shareholders on the progress of talks.
The negotiations have dragged on for weeks as company representatives clashed with state officials over bailout terms the carrier fears could sap its competitiveness against rivals on its lucrative intercontinental routes.
Germany’s government last week agreed to a unified position that would see the state take at least a 25% stake in the airline group in exchange for voting rights and at least one seat on the firm’s supervisory board, according to people familiar with the matter. They’re also discussing a so-called silent participation and a package of loan and credit guarantees, the people said.
“The future of Lufthansa is being decided,” Spohr said, according to the text of a speech to be given at the annual meeting. “It is about avoiding an insolvency with the help of the governments of our four home markets.”
Negotiations are also continuing with Austria and Belgium after Lufthansa agreed to a package of credit guarantees with Switzerland last week. The airline group operates so-called flag carriers in all four nations.
Like airlines the world over, Lufthansa is fighting a crisis that’s punctured a decades-long aviation boom. The firm is cutting back its fleet and closing the Germanwings discount arm to resize for what it warned could be years of depressed travel.