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The supervisory board of Lufthansa on Monday approved a €9 billion ($9.9 billion) state bailout proposal and urged shareholders to back its decision.
Lufthansa’s LHA, supervisory board, led by chairman Karl-Ludwig Kley, voted in favor of the rescue plan, which would see the German government a 20% stake in the airline, and called an extraordinary general meeting of shareholders for June 25. The company’s executive board approved the package at the end of May but it still needs shareholder and competition authority approval. The German airline added it would also hold “top-level meetings” with unions.
The move comes just days after the supervisory board had refused to approve the rescue package over concerns at conditions imposed by the European Union that would have forced the stricken carrier to give up key slots at two of its main hubs.
Read:Lufthansa refuses to approve $9.9 billion bailout over EU conditions
However, over the weekend, Lufthansa agreed to transfer to rivals up to 24 takeoff and landing slots to competitors at major hubs in Frankfurt and Munich, as well as giving up some aircraft to rivals.
For the first 18 months the slots, which will allocated through a competitive bidding process, will only be available to new competitors at the airports – existing competitors will be able to bid once this period expires.
The slots are only open for European rivals that haven’t received substantial state recapitalization in the wake of the coronavirus pandemic.
“It was a very difficult decision. After intensive discussion, we have come to the conclusion to agree to the Executive Board’s proposal,” Kley said.
We recommend that our shareholders follow this path, even if it requires them to make substantial contributions to stabilizing their company. It must be clearly stated, however, that Lufthansa is facing a very difficult road ahead, “ Kley added.
Kley said the bailout still needs to be approved by regulators and shareholders and stressed that the rescue funds in the form of loans and deposits would have to be repaid as soon as possible.
Lufthansa, which said it would publish its first-quarter results on June 3, said it is “already obvious” that international air traffic won’t reach pre-crisis levels in the coming years.
Read:Global airlines face bankruptcy by May if governments don’t intervene
“The expected slow market recovery in global air traffic makes an adjustment of our capacities unavoidable. Among other things, we want to discuss with our collective bargaining and social partners how the impact of this development can be softened in the most socially acceptable way possible,” Lufthansa chief executive Carsten Spohr said.
