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Bloomberg
Deutsche Lufthansa AG Chief Executive Carsten Spohr is facing mounting pressure to hand over an equity stake to the German government as the airline fights for survival in the coronavirus crisis, according to people familiar with the matter.
Lufthansa representatives are locked in talks with the cabinet in Berlin, the people said, asking not to be identified because the matter is private. Spohr has resisted the idea Germany would need to take a direct equity stake, preferring instruments such as loans or credit guarantees to shore up cash reserves.
A spokesman for Lufthansa said the firm was talking to the government and state-backed development lender KfW about options that would maintain liquidity, but declined to comment further. A spokeswoman for Germany’s Economy Ministry declined to comment.
The people familiar with the discussions said uncertainty on when the majority of the airline’s fleet will fly again, whether it will have to refund thousands of customers and questions about Lufthansa’s debt servicing capacity have led participants to discuss scenarios under which the government would take an equity stake in the German flagship carrier.
Like airlines worldwide, Lufthansa is fighting to maintain liquidity amid a sudden stop in revenue. The company had about $5.5 billion in liquidity, according to a Credit Suisse analysis last month, a sum that would barely cover liabilities if the EU upholds laws that would mandate cash refunds for cancellations on demand.