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Birgit Jennen, William Wilkes and Matthias Wabl at Bloomberg News report that Deutsche Lufthansa AG’s talks with the German government over a multi-billion euro aid package are coming down to how much the state will profit over coming years for rescuing Europe’s biggest airline.
According to Bloomberg, people familiar with the matter said while Lufthansa Chief Executive Officer Carsten Spohr said this weekend that negotiations are moving toward a conclusion, the sides are still haggling over financing terms.
Germany wants to be sure it emerges better than even from a bailout after losing money when rescuing banks following the 2008 financial rout, Bloomberg states. Lufthansa fears that will make it harder to weather a extended travel slump and compete with airlines that have received more generous terms for state assistance, Bloomberg notes.
Negotiations concern loans, credit guarantees and a state equity injection, split between shares with voting rights and a so-called silent participation limiting the government’s day-to-day say, Bloomberg discloses. The people, as cited by Bloomberg, said officials are pushing for a 9% guaranteed dividend for the latter, a figure the airline says is too high.
They said an agreement is still expected to be in place in the next few days or early next week, Bloomberg relays.
Like airlines the world over, Lufthansa is fighting for survival as the coronavirus crisis punctures a decades-long aviation boom, Bloomberg discloses. It’s cutting back the fleet and closing discount arm Germanwings to resize for what it warns could be years of depressed demand, Bloomberg says.
The four-nation carrier is also continuing negotiations with Austria and Belgium after securing credit guarantees from Switzerland, according to Bloomberg. One person said Austria is considering an equity or silent participation deal, with an agreement likely to follow a German accord, Bloomberg notes.