Lufthansa seeks to pay off German bailout with € 2.1 billion share offer

Updates from Deutsche Lufthansa AG

Lufthansa will raise more than 2.1 billion euros by offering new shares to investors, the German carrier said on Sunday, and use the proceeds to repay the multibillion-euro bailout it received from Berlin to the summer 2020.

The long-awaited fundraiser, underwritten by 14 banks and slated for completion in early October, will help the Frankfurt-based airline repay the full 2.5 billion euros it has taken from its country’s Economic Stabilization Fund (ESF) original by the end of the year, the group added. .

The German ESF participated in a rescue plan of 9 billion euros for Lufthansa last summer, which included support from the Austrian, Swiss, Italian and Belgian governments. Berlin also spent 300 million euros on company shares and now owns almost 16% of the group.

Lufthansa has repaid much of what it got from the package, including a € 1 billion loan from German development bank KfW.

Once the ESF tranche is fully repaid, the airline will cancel the facility in full, before repaying the € 1.2 billion it owes the remaining governments, a spokesperson said.

“We have always made it clear that we will only keep the stabilization package for as long as is necessary,” said Managing Director Carsten Spohr. “We can now fully focus on further transforming the Lufthansa Group. ”

After being forced to almost all its planes on the ground at the height of the pandemic, the group is slowly recovering, with flights in august reaching 50% of those made the same month in 2019.

Lufthansa said it expected a similar percentage in September and October, as demand for international and corporate travel increases, and added that it is currently flying to 85% of its pre-pandemic destinations.

Its freight business has been booming in recent months as cargo capacity in the underbelly of passenger planes remains limited amid increasing demand for air deliveries, with online shopping continuing to be popular.

While still burning around 200 million euros per month in cash, Lufthansa said it does not expect any third quarter operating cash flow and earnings before interest, taxes, depreciation. and amortization turns positive for the first time since the pandemic broke.

The group, which aims to return to overall profitability in 2024, also plans to take delivery of up to 30 new aircraft per year in the future.

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