Lufthansa’s Austrian arm gets $508mn government bailout

Bloomberg

Deutsche Lufthansa AG’s historic state bailout increased by 450 million euros ($508 million) after Austria agreed to provide support to the German carrier’s division in the country.
Austrian Airlines will get 150 million euros in direct aid plus 300 million euros in loans underwritten by the government, helping to sustain the unit as carriers begin to restore flights amid an easing of coronavirus lockdowns, Chancellor Sebastian Kurz said in a briefing.
Lufthansa has already won European Union backing for a 9 billion-euro package from Germany and secured $1.3 billion in state support for its Swiss arm. The Austrian breakthrough leaves Belgium as the only one of the group’s four home countries yet to reach an agreement on emergency funding, with talks ongoing.
Europe’s biggest airline, which will match Austria’s cash contribution, faces a renewed challenge in Vienna after Ryanair Holdings Plc, the region’s largest discount operator, said its Laudamotion arm would retain a hub in the Austrian capital following an agreement on new pay terms. Lufthansa closed 9.1% higher in Frankfurt for its biggest gain since April 27 after Bloomberg reported details of the deal earlier.
Lufthansa Chief Executive Officer Carsten Spohr agreed to keep Vienna as its hub for central and eastern Europe for at least 10 years and to expand it in tandem with the group’s other bases, backed by penalties if that accord is broken. The clause reflects Austrian Airlines’ status as a key plank for the economy, offering vital inter-continental connections.
After initially exploring an equity holding in Lufthansa, Austria settled for guarantees and the right to nominate members to the unit’s supervisory board and ownership trust.