Lufthansa seeks to repay German bailout with € 2.1 billion share offer

Updates from Deutsche Lufthansa AG

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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 fundraising, underwritten by 14 banks and expected to end in early October, will help the Frankfurt-based airline repay the full 2.5 billion euros it has withdrawn from the Stabilization Fund economy (ESF) of his country of origin by the end of the year, added the group.

The German ESF took part in a € 9 billion bailout for Lufthansa last summer, which included support from the governments of Austria, Switzerland, Italy and Belgium. 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 ground nearly all of its planes during the height of the pandemic, the group has slowly recovered, with flights in August reaching 50% of those carried out 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, as online shopping continues 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 that earnings before interest, taxes, depreciation and amortization becomes positive for the first time since the pandemic. exploded.

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.