DThe country takes the lead in withdrawing from the German bloc Lufthansa exist. Surprisingly, the Federal Economic Stability Fund (WSF) wants to sell Lufthansa stock, which was acquired during the summer of 2020 to gain state support. As announced by the Ministry of Economic Affairs under the leadership of Peter Altmeier (CDU), the federal government on Monday confirmed the sale of a maximum of 5% of Lufthansa shares, that is, “within a few weeks based on market conditions.” This reduces the country’s share from 20% to 15%.
A ministry spokesperson assured FAZ that the state is partially withdrawing from Lufthansa, “at the same time protecting the interests of taxpayers.” The Stability Fund stated: “After the initial success of Lufthansa’s future-oriented measures, WSF is adjusting its level of participation in a targeted manner, taking into account the interests of both parties.”
First of all, national profit
The federal government’s interests are likely to correspond to the fact that it will be Bundestag election Achieved sales revenue. In the summer of 2020, he bought the stock at a preferential price of 2.56 euros; on Monday, the stock quote was about 9 euros. The dpa-AFX news agency quoted a stock market trader as saying: “The government seems to want to realize some of its huge book profits before the September election to show that taxpayers’ money has brought good returns.” For the country , The initial sales profit may be as high as 200 million euros.
Lufthansa may also be very interested in advancing its financial planning after the corona crisis. The group hopes to increase its capital in the near future. Through the issuance of new shares, funds will flow into the group’s treasury to repay government assistance as soon as possible. If the federal government, as the largest shareholder, disagrees, it will send an unfortunate signal to the capital market from the perspective of the group. On Monday, the state announced that it would give up its 5% stake, which lowered Lufthansa’s interest rate. The stock is one of the biggest losers in M-Dax.
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Through the sale of stocks, the state gains room for maneuver to acquire stocks again, without being threatened by major obstacles stipulated by the State Aid Law. The proceeds from the sale of shares can be used to complete the acquisition without the need for additional funds. WSF also lost the agreed theoretical possibility of converting silent participation into shares, thus establishing a 25% blocking minority. The industry believes that the federal government will participate in the capital increase to keep its shareholding ratio stable at 15%, and it is not allowed to be diluted. There is no official statement yet.
Lufthansa hopes to quickly repay state aid
Chief Executive Officer of Lufthansa Carsten Spor At the end of September, before the federal election, a goal of repaying state aid was set-the use of capital increase money. However, due to the ongoing coronavirus crisis and travel restrictions and reluctance to book reservations, market conditions are not suitable for large-scale launches of airlines’ new shares to the market.
Initially, Lufthansa may plan to raise up to 3 billion euros, but at the same time, people around the group said they now plan to reduce it, raising up to 2 billion euros. WSF’s participation in the capital increase seems to have been taken into consideration. When asked about this, Lufthansa did not comment. The Federal Ministry of Economic Affairs recalled on Monday that the federal government has played a key role in supporting Lufthansa through WSF, with a total of 9 billion euros, to ensure the group and its more than 100,000 jobs in the new crown crisis.
A complex 9 billion euro package
In addition to silent participation, the public sector also acquired shares, but these were only “temporary” from the beginning. The promise is only to temporarily help the “corona-related” of traditional companies, which is actually healthy. Another goal is to “maintain Germany’s leading position in the world civil aviation market.”
In the summer of 2020, Lufthansa provided a 9 billion euro aid package. The home countries of the Austrian, Belgian and Swiss subsidiaries contributed approximately 2 billion euros. Germany provides most. This includes a 1 billion euro loan repayment from the National Bank for Reconstruction Credit. In addition, there is a silent donation of approximately 5.7 billion euros from WSF, of which Lufthansa currently requires 2.5 billion euros, as well as shares purchased by the state.
Spokesperson of the Federal Minister of Economy Peter Altmeier It is clear that the partial sale will not change the conditions agreed by Lufthansa in the stabilization process. For example, this includes no further dividend or bonus payments. Only after the aid is repaid will the conditions go down.
This also includes that Lufthansa is temporarily not allowed to participate in mergers and major acquisitions in the aviation industry. Repayment also brings economic relief. The group currently pays 4% interest on WSF’s silent contribution; in the coming year, the interest rate will rise to 5%. In the bond market, Lufthansa has recently been able to raise funds at lower interest rates of 2% and 3.5%, respectively.
