General Industry

Germany Considering Participating In Planned Lufthansa Capital Increase

By Dave Simpson
Germany Considering Participating In Planned Lufthansa Capital Increase

Germany is considering participating in a planned €3 billion capital increase at Lufthansa, finance minister Olaf Scholz told Reuters, a move that could help to repay the airline's state-backed bailout.

Last month, Reuters reported that Lufthansa was working with Deutsche Bank and Bank of America on plans for a capital increase in either the summer or autumn.

Scholz Statements

"We are always taking a close look at this. One thing is clear: if companies have a goal of freeing themselves of a need for state support, we will make that possible," Scholz said in an interview.

"Our support was put in place so that companies could survive the crisis and then stand on their own feet again," he said.

Silent Participation

The bulk of a government-backed €9 billion bailout for the German carrier, which has been hit hard by the COVID-19 crisis, consists of a so-called silent participation of €5.5 billion, which Lufthansa intends to repay in part with proceeds from the capital increase.



The participation of the German government could send a positive signal to markets and help ensure that the refinancing is successful and also limit a dilution of the government's 20% stake.

However, it could also prompt state aid questions from the European Commission, people in the sector say.

Bloomberg first reported the government was considering participating in the capital hike. Citing unidentified sources familiar with the matter, it said that the government could sell part of its subscription rights and use the proceeds to purchase new shares. Alternatively, it could make use of more of its subscription rights and spend up to €1 billion.

Additional Scholz Statement

Scholz said that any decision on a capital increase should not be rushed.

Declined To Comment

Lufthansa and the economy ministries declined to comment.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.