Germany Planning To Sell Up To A Quarter Of Its Lufthansa Stake; Embraer Records Quarterly Recurring Profit
Germany is planning to sell up to a quarter of its 20% stake in Lufthansa over the coming weeks, the German finance agency has said, citing positive developments at the bailed-out airline.
Lufthansa shares fell as much as 4.9% to €8.81 after the announcement.
The state's 20% stake was acquired for €300 million as part of a bailout for the German carrier as the company and the entire aviation sector took a battering from the COVID-19 crisis.
Lufthansa had received a €6 billion package from Germany's economic stabilisation fund (WSF), which was set up to help companies to ride out the pandemic.
The WSF has said that it would sell the complete stake, which is currently worth more than €1 billion, before the end of 2023.
Lufthansa plans to issue new shares, probably before the September 26 parliamentary elections, to help it to return bailout money to taxpayers.
Shareholders have approved a potential capital increase of up to €5.5 billion.
Embraer Records Quarterly Recurring Profit
In other aviation industry news, Brazilian plane maker Embraer SA has recorded its first quarterly recurring profit in more than three years and taken another step towards the development of the first brand-new Western turboprop aircraft in decades.
Turboprops are said to be more efficient on shorter trips and are particularly attractive at a time of higher oil prices.
Embraer's new concept for the turboprop would feature engines mounted at the rear of the aircraft, an unusual change from the more conventional wing-mounted engines, the company's chief commercial officer, Arjan Meijer, said on Twitter.
The company has been searching for a partner to develop a new turboprop that would compete with European manufacturer ATR, which dominates the market with a long-established model of roughly 50 to 70 seats.
Embraer had previously sought to develop its turboprop under a partnership with Boeing that fell through early in the coronavirus pandemic.
Meijer did not say who would supply the aircraft's engines.
Pratt and Whitney currently supplies all turboprop engines, but GE Aviation is developing a competing model.
Embraer reported second-quarter net income of 212.8 million reais ($40.5 million), its first recurring profit since the first quarter of 2018, driven by a partial recovery in travel.
A year earlier it posted a loss of 1.071 billion reais and was scrambling to restructure operations to contend with the pandemic and the failed $4 billion deal with Boeing Co.
The second quarter of last year was particularly brutal for planemakers, and the vast majority of Embraer's commercial aircraft revenue vanished as airlines deferred orders.
But Embraer has suggested that it may be turning the page.
Embraer chief financial officer Antonio Carlos Garcia said on a call with analysts that Embraer is poised to post a stronger performance next year, and he is "very optimistic" about finding a partner for the turboprop.
Embraer, which had suspended guidance for its operations when the pandemic began, said it sees commercial deliveries at between 45 and 50 planes and executive aviation deliveries at 90 to 95.
Revenue, which more than doubled in the second quarter to $5.922 billion, is likely to be between $4 billion and $4.5 billion, with an adjusted EBITDA margin of 8.5% to 9.5%.
Free cash flow should be at breakeven, with a cash burn of up to $150 million seen this year.