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Lufthansa shareholders have voted in favour of a €9 billion bailout package from the German government.
It has been a fraught week for Lufthansa.
Its single largest shareholder, Heinz-Hermann Thiele, who owns 15% of the company, only confirmed support for the bailout package on Wednesday night. He had previously indicated the package, which involves the German government taking a 20% stake in Lufthansa and gaining two seats on its supervisory board, had allowed the state to acquire a stake at too low a price and it should be renegotiated.
The bailout package required a 75% majority in favour to secure shareholder support. Shareholders ultimately voted 98% in favour.
Had shareholders voted against the package, this would have prompted a standoff with the German government. It could have forced Lufthansa into bankruptcy proceedings. In all likelihood, as Lufthansa has such a dominant position at its major hubs such as Frankfurt and Munich, with around 70% of slots, it would have been deemed too big to fail.
Of the €9 billion in aid, only €3 billion has to be repaid in the next three years. The remaining €6 billion has been approved by the European Commission.

Other Lufthansa Group airlines have already received state support. Austrian Airlines has received €150 million in direct aid, with conditions, and €300 million in state guaranteed loans from the Austrian government. SWISS has has received CHF1.5 billion in state guaranteed loans.
Aviation’s Dash For Cash
It has been a busy week for airlines and raising new funds.
Today, easyJet announced it has raised nearly £420m in a share placement. For readers that are financially minded, the Financial Times Alphaville blog has some analysis and commentary. It’s free to read if you are registered with the site. Qantas will also raise up to AU$1.9 billion in new equity.
American Airlines is raising up to $4 billion through a number of means such as bonds and loans. United Airlines plans to raise up to $5 billion through bonds and loans, using its Mileage Plus frequent flyer programme as collateral. This is on top of significant support from the US government through the CARES Act.
In terms of the other two major European network airline groups, Air France-KLM has secured loans of €7 billion guaranteed by the French state and up to €4 billion guaranteed by the Dutch state. Whilst there are conditions attached to these loans, they do not involve either governments increasing their stakes in Air France-KLM.
Whilst IAG has taken advantage of state guaranteed credit facilities and employment protection programmes, it has not negotiated any specific bailouts with any government. BA has also raised $750m by mortgaging some of its aircraft.
There have been reports that IAG may undertake a rights issue to raise further funds from its shareholders. If this goes ahead, details should be known within the next month.
All of these sums are, by any measure, huge amounts of money that have to be repaid in the coming years. If airlines cannot generate the cash flows to repay these debts this will prompt further restructuring in the industry.
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