(Bloomberg) — Chancellor Angela Merkel said Germany is in talks to bail out Deutsche Lufthansa AG are nearing completion, providing hope for a positive resolution, as the difficulty of the airline management, has warned that a multi-billion euro rescue became urgent.
“A decision can be expected very soon,” angela Merkel said on Wednesday evening in Berlin, adding that “intensive talks” were on with the company and those of the European Commission, which would need to approve a deal to me. She refused to go into details, saying: “I would give the advice: wait for the talks to the end.”
In a letter to employees, the airline warned, the cash reserves have continued to decrease, while it negotiates the 9 billion euros ($9.9 billion) rescue plan. Lufthansa board said that it hoped that the government, the “political will” for a deal that would keep the carrier competitive with international airlines.
Spiegel magazine reported that Merkel and the Finance Minister, Olaf Scholz, and the Economics Minister, Peter Altmaier, has taken a decision on the Lufthansa package, ending weeks of internal quarrels on the position of the government.
Lufthansa has gained 4.3% to 8.28 euros at the end of the negotiation after regular, Frankfurt, February. The stock has lost half its value this year.
The German government and Lufthansa have been locked in an intense negotations for a week on the rescue plan. While the Ministry of the Economy, to the internal agreement on the stake of 25% plus one share of the company, had opposed the move, people familiar with the matter said earlier.
However, Under German law, 25% plus one share, the stake would enable the government to block the movement of the company’s annual general meeting, by giving a right of veto on major decisions.
To break the stalemate, the scenario that is under discussion, see the airline sell 9.3% of the new shares to the government at a steep discount. Additional convertible notes could then give the government a blocking minority, if necessary. Such an approach would also give the state a potential upside from a rebound in the Lufthansa share.
Lufthansa executives have raised concerns that the conditions on the sacrifice, would hamstring against the international competition, which have received less stringent bailout conditions to a point of the management board and repeated in the letter. The carrier declined to comment.
Lufthansa, is meanwhile running out of time and money, and burning through € 800 million for each month after the corona virus, grounding most of its fleet. The Chief Executive Carsten Spohr said on May 5 that the company had ” approximately 4 billion euros in remaining liquid.
The letter to the employee gifts, more details of Lufthansa’s planned fleet reductions for the years to come. The council said it expected 300 of its aircraft will remain in the earth in 2021 and, as the demand for the flight, and recovers slowly, with the 200 remaining out of service and 2022.
Lufthansa had already said that it expects its pre-crisis level of the fleet of approximately 760 aircraft to be around 100 small once normality returns, around 2023, a forecast it stayed in the case.
Spohr, earlier this month, said the airline is in “intense” talks with Airbus and Boeing Co. on the suspension of the shipment plan and defined-plans-for-survive-the-feline corona virus of the day.
(Recasts with Merkel comments, the Lufthansa final)
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©2020 By The International Monetary Fund, L. P.