The largest German air carrier Lufthansa (LHAB) (LHA) aims to repay €9 billion of state aid before the country’s federal election in September 2021, the Group Chief Executive Officer (CEO) Carsten Spohr hinted.
Speaking to the media on June 18, 2021, the CEO outlined that Lufthansa (LHAB) (LHA) is focused to repay the state aid of €9 billion before the federal election arguing that it was one of the first airlines to receive the financial rescue package during the pandemic, therefore it aims “to be one of the first companies to pay back the rescue funds“.
On June 1, 2021, Lufthansa Executive Board member Harry Hohmeister said that the airline had so far used around €2.3 billion of the aid. Although the company has already managed to repay €1 billion, Hohmeister was not able to provide an exact time frame when the remaining state aid could be repaid.
“When and how we can fully stand on our own two feet again also depends on how the pandemic, and therefore demand, develop,” Hohmeister told local media.
As part of the multi-billion rescue deal between shareholders of Lufthansa (LHAB) (LHA) and the government of Germany, which was signed in June 2020, both parties agreed that in exchange for €9 billion state aid, the government would receive a 20% stake in the company.
Initially, Heinz Hermann Thiele, the board’s top shareholder, opposed the government ownership, but at the time the agreement was concluded, Lufthansa Group, consisting of Lufthansa (LHAB) (LHA), Brussels, Austrian and Swiss Airlines, was bleeding in cash at around €1 million every hour, meaning that the government help was crucial for the company to stay afloat.
The major part of the €9 billion state aid consisted of €5.7 billion taken directly from the country’s capital, while the other part of the rescue package was lent by state-owned development bank KfW.
Following the agreement, the government also purchased 20% of Lufthansa’s (LHAB) (LHA) shares for a reduced price of around €300 million.