Lufthansa appears to be like to repay German bailout with €2.1bn share provide

Deutsche Lufthansa AG updates

Signal as much as myFT Day by day Digest to be the primary to learn about Deutsche Lufthansa AG information.

Lufthansa is to lift greater than €2.1bn by providing new shares to traders, the German provider stated on Sunday, and use the proceeds to repay the multibillion-euro bailout it obtained from Berlin in the summertime of 2020.

The long-anticipated capital raising, underwritten by 14 banks and because of be accomplished in early October, will assist the Frankfurt-based airline refund the complete €2.5bn it has drawn from its residence nation’s Financial Stabilisation Fund (ESF) by the tip of the yr, the group added.

Germany’s ESF participated in a €9bn rescue package for Lufthansa final summer season, which included assist from the Austrian, Swiss, Italian and Belgian governments. Berlin additionally spent €300m on shares within the firm, and now owns virtually 16 per cent of the group.

Lufthansa has repaid a lot of what it drew from the bundle, together with a €1bn mortgage from the German improvement financial institution KfW.

As soon as the ESF tranche is absolutely repaid, the airline will cancel the power in its entirety, earlier than repaying the €1.2bn it owes to the remaining governments, a spokesperson stated.

“We have now at all times made it clear that we’ll solely retain the stabilisation bundle for so long as it’s obligatory,” stated chief govt Carsten Spohr. “We are able to now absolutely give attention to the additional transformation of the Lufthansa Group.”

After being compelled to ground almost all its planes on the peak of the pandemic, the group has been slowly recovering, with flights in August reaching 50 per cent of these flown in the identical month in 2019.

Lufthansa stated it anticipated an analogous share in September and October, as demand for worldwide and company journey will increase, and added it was at present flying to 85 per cent of its pre-pandemic locations.

Its cargo enterprise has been booming in current months, as freight capability within the bellies of passenger aeroplanes stays restricted amid a surge in demand for air deliveries as on-line procuring continues to be standard.

Whereas it’s nonetheless burning by roughly €200m a month in money, Lufthansa stated it anticipated to haven’t any working money drain within the third quarter, and for earnings earlier than curiosity, taxes, depreciation and amortisation to show optimistic for the primary time for the reason that pandemic broke out.

The group, which is aiming to return to total profitability in 2024, additionally expects to take supply of as much as 30 new plane per yr sooner or later.