Lufthansa CEO says airline's bailout plan is at risk over lack of support

The company’s management now needs two thirds of stockholders to approve the bailout

FILE PHOTO: Airplanes of German carrier Lufthansa are parked at the Berlin Schoenefeld airport, amid the spread of the coronavirus disease (COVID-19) in Schoenefeld, Germany, May 26, 2020. REUTERS/Fabrizio Bensch/File Photo
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Deutsche Lufthansa’s chief executive Carsten Spohr said the German government’s €9 billion ($10.1bn/Dh36.9bn) bailout plan for the airline was at risk because it will now face a higher threshold for its final passage.

Just 38 per cent of shareholders registered to vote at the carrier’s extraordinary general meeting on Thursday, Mr Spohr said in a letter to employees, seen by Bloomberg on Sunday, a level that means the company’s management now needs two-thirds of stockholders to approve the bailout or risk tipping Europe’s biggest airline into insolvency. Had more than 50 per cent registered, a simple majority in favour would have sufficed.

The low attendance points means that Heinz-Hermann Thiele, a German billionaire and Lufthansa’s biggest shareholder with 15 per cent of its stock, can likely scuttle the deal. Mr Thiele last week said he didn’t like the plan – agreed after weeks of intensive negotiations with the government – sparking speculation that he’d use his votes to shoot it down with the aim of reopening talks.

Mr Spohr in the letter said he wasn’t sure whether the deal would pass, adding that the company would engage in negotiations with the government before filing for insolvency, a scenario he said was it was his priority to avoid. He also said he was in contact with the government and Mr Thiele ahead of Thursday’s vote.

Like airlines worldwide, Lufthansa is fighting for survival after the coronavirus pandemic punctured a decades-long boom in aviation. The deal it struck in May for a package of loans, equity and credit guarantees is designed to stave off bankruptcy. The group has said it faces a cash crunch and previously warned it might not be able to pay its employees in July.

Mr Thiele is particularly sore about plans for Germany to take a 20 per cent stake in the company for the nominal share price of €2.56, a move that would enable the state to book a healthy profit if Lufthansa can weather the crisis and keep flying. The billionaire, whose own stockholding will be dliuted if the deal goes ahead, last week accused the state of profiteering.