Germany mulls selling up to a quarter of its 20 per cent stake in Lufthansa Group over the coming weeks, the German finance agency said on Monday, citing positive developments at the bailed-out airline.
The state’s 20 per cent stake , which factually the 5% of total Lufthansa group share, was acquired with an option for €300 million ($353.67 million) as part of a bailout for the German airline, as the company and the entire aviation sector saw the worst in it's history.
Its Worth noting that , Total bailout package by Germany was €9 billion, out of which €5.7 billion was a silent capital contribution from the state, along with a €300 million share package. The remaining €3 billion was a loan from state-owned development bank KfW.
The Federal Government announced the 20 per cent stake initially to help the airline mitigate the effects of the global pandemic. The bailout effectively saved the airline from bankruptcy in June 2020.
This investment of the German Government came by way of the Economic Stabilization Fund (WSF), which was established in March 2020. The fund’s core objective was to stabilize major German companies and by doing so, preserve jobs.
While , both the German government and the carrier desire that the company regains fiscal independence at earliest , the WSF wants to sell the complete stake, which is currently worth more than €1 billion, before the end of 2023.
On the other hand, Lufthansa group plans to issue new shares, most likely before the Sept. 26 parliamentary elections, to help it to return bailout money to German taxpayers.
To aid this, Company Shareholders have approved a potential capital increase of up to €5.5 billion.
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Lufthansa managed to reduce its losses to almost 50% in the second quarter of 2021 compared with the same period last year. This positive development was a result of eased travel restrictions and vaccation deprived travellers rushing to the airport.
Look is optimistic ,and the German Flag bearer has witnessed a positive cash flow since the start of the coronavirus crisis and is expecting a return to profitability within this year.
Earlier, the airline had to do some surgical cost-cutting to maintain the financial liquidity, due to which there were more than 30,000 job cuts, and the gradual trimming of the mighty fleet of 800 aircrafts down to 650 by 2023.
In another development at present, Lufthansa has re-inforced its presence at Bristol Airport by introducing regular service from Bristol to Frankfurt on 2nd of August .
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