A Lufthansa aircraft approaches the airport in Frankfurt, Germany, Tuesday, June 23, 2020. The German airline Lufthansa will hold its annual shareholders meeting on Thursday. (AP Photo/Michael Probst)
June 25, 2020 - 3:57 AM
FRANKFURT - Lufthansa's board chairman urged shareholders to let the government take a stake in the company through a 9 billion-euro ($11 billion) rescue package, saying the alternative was bankruptcy for the company and its 138,000 employees.
With 80% of Lufthansa's airplanes grounded, “we have run out of money,” Chairman Karl-Ludwig Kley told participants in the online, extraordinary shareholder meeting called to approve the plan. “We are living from the reserves we set aside" in good years. “Without support, a bankruptcy looms.”
The package would see the government take a 20% stake through its economic stabilization fund and get two seats on the board. Kley said the idea was for the government to dispose of the stake as soon as possible once the airline is stabilized. The government could raise it stake to block any outside takeover. The airline also stands before an extensive restructuring to lower its costs because it is expected to take years before business returns to normal.
The company, which also owns other airlines including Austrian Airlines and Swiss, appeared on course to get the deal approved after major shareholder Heinz-Hermann Thiele told the daily Frankfurter Allgemeine Zeitung that he would vote for it. Thiele had previously raised questions over his approval, prompting the company last week to warn that the package could be in danger and to plead with all shareholders to exercise their voting rights.
Hours before the meeting, Lufthansa and the UFO union, which represents cabin crew, said they had agreed on a deal that will allow the company to save more than 500 million euros ($554 million) through the end of 2023. UFO said it includes a four-year protection against layoffs for cabin crew.
Meanwhile, the European Union's executive Commission approved Germany's plans to contribute to recapitalizing Lufthansa as part of the rescue package. It noted that Lufthansa has committed to freeing up some slots at its Frankfurt and Munich hubs.
___
Follow AP pandemic coverage at http://apnews.com/VirusOutbreak and https://apnews.com/UnderstandingtheOutbreak
News from © The Associated Press, 2020