Lufthansa shareholders approve German rescue package

Germany’s Lufthansa has won shareholders’ support at an extraordinary general meeting for a 9 billion-euro ($10.2 billion) rescue package

FRANKFURT, Germany — Lufthansa shareholders approved a 9 billion-euro ($11 billion) rescue package Thursday that will see the German government take a 20% stake after management told them the airline was running out of money and faced years of reduced demand for air travel.

Shareholders gave the necessary majority of more than two-thirds by voting 98.04% to 1.96% at an extraordinary shareholder meeting held online with just the one agenda item.

With 80% of Lufthansa’s planes grounded, “we have run out of money,” Chairman Karl-Ludwig Kley told participants. “We are living from the reserves we set aside” in good years. “Without support, a bankruptcy looms in the next few days.”

The package will see the government take a 20% stake through its economic stabilization fund and get two seats on the board. Kley said the idea was for the government to dispose of the stake as soon as possible once the airline is stabilized.

The German government could raise its stake to block any outside takeover. The airline will also embark on an extensive restructuring to lower its costs because it is expected to take years before business returns to normal.

CEO Carsten Spohr said that the airline and its currently 138,000 employees faced a “new normal” of reduced demand that would last for several years.

The company, which also owns other airlines including Austrian Airlines and Swiss, appeared on course to get the deal approved after major shareholder Heinz-Hermann Thiele told daily newspaper Frankfurter Allgemeine Zeitung he would vote for it.

Thiele had previously raised doubts over his approval, prompting the company last week to warn that the package could be in danger and to plead with all shareholders to exercise their voting rights.

Hours before the meeting, Lufthansa and the UFO union, which represents cabin crew, said they had agreed on a deal that will allow the company to save more than 500 million euros ($554 million) through the end of 2023. UFO said it includes a four-year protection against layoffs for cabin crew.

Meanwhile, the European Union’s executive commission approved Germany’s plans to contribute to recapitalizing Lufthansa as part of the rescue package. It noted that Lufthansa has committed to freeing up some slots at its Frankfurt and Munich hubs.

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Moulson reported from Berlin.

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