Lufthansa Plans To Increase Capital To Repay State Bailout

Lufthansa announced on Sunday, September 19, it would launch a capital increase that was expected to raise €2.14 billion (US$2.51 billion) to pay back part of a state bailout Germany’s top airline received during the coronavirus crisis.

The subscription period for the widely-expected rights issue, involving the issue of about 597.7 million new shares, would run from September 22 to October 5, Lufthansa stated.

The airline will use the net proceeds to repay a chunk of the €9 billion government bailout it received last year to stay afloat throughout the COVID pandemic, which resulted in the Economic Stabilisation Fund taking a stake in the group.

“We have always made it clear that we will only retain the stabilisation package for as long as it is necessary,” Chief Executive Carsten Spohr said.

“We are therefore proud that we can now deliver on our promise and repay the measures faster than originally expected. We can now fully focus on the further transformation of the Lufthansa Group,” he said.

Lufthansa stated that based on its operating performance in July and August it expected to post positive adjusted earnings before interest and tax in the third quarter.

Insiders told Reuters this year that Lufthansa was planning a capital increase of roughly €3 billion, but Spohr has said lower pension liability had reduced the need for fresh capital in the past months.

A number of funds under the management of Blackrock  have entered into a sub-underwriting agreement for a total of €300 million as part of the capital increase and have committed to fully exercise their subscription rights, Lufthansa stated.

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