At the virtual meeting of the shareholders, Lufthansa CEO Carsten Spohr called for support. “We don’t want anything other than your consent to save Deutsche Lufthansa,” he said.
Time was running out. Lufthansa lost € 1.2 billion ($ 1.3 billion) in the first quarter, and said it burned € 1 million ($ 1.1 million) in cash every hour last month. On May 5, there was € 4 billion ($ 4.5 billion) in cash.
“We just don’t have any money,” said Lufthansa president Karl-Ludwig Kley shareholders. At the meeting on Thursday. He added that reserves collected over the years will soon be exhausted and bankruptcy stalls will be added without government assistance.
Owning 39% of the company’s shares, the shareholders voted almost unanimously to support the recovery. Per-Ola Hellgren, an investment analyst and director at the German bank Landesbank Baden-Württemberg, said it was “a rational decision under conditions” to accept the agreement at the table.
He added that voting against the agreement would mean “taking a big risk”, potentially forcing Lufthansa to begin bankruptcy proceedings.
Vital for Germany
Global aviation is not expected to recover from the pandemic for several years. Lufthansa, which owns airline companies in Germany, Switzerland, Austria and Belgium, plans a comprehensive restructuring program that will reduce its fleet by 13% and cause up to 22,000 business interruptions. He said 80% of the Kley fleet is still grounded.
The company said on Thursday that an agreement was reached with the UFO, one of the trade unions representing flight attendants, this would save € 500 million ($ 562 million) in costs without guaranteeing forced dismissal for four years. Savings will be achieved through a temporary cut in purchases, wages freezing, reduced hours, unpaid leave, early retirement and pension contributions.
Spohr told shareholders that the company would reach a similar agreement with the pilots’ Association VC, but talks with a third union Verdi were “disappointing”.
The group secured a $ 1.5 billion loan against the Swiss government guarantee and received a € 450 million ($ 507 million) package backed by the Austrian government. Negotiations with the Belgian government continue.
Rescue of Germany would give the government the right to appoint two members of the company’s supervisory board, and said it could hinder analysts’ efforts to restructure.
Neil Glynn, head of European transport stock research at Credit Suisse, said that if Lufthansa’s restructuring plans are delayed, it may attract less competitive and less investment in the future.
– Fred Pleitgen and Eoin McSweeney contributed to reporting.