Lufthansa shareholders confirm bailout approval

Lufthansa shareholders confirm bailout approval

Lufthansa shareholders on Thursday overwhelmingly backed a nine billion euro ($10 billion) bailout by the German government, saving Europe's largest airline group from bankruptcy after the coronavirus crushed travel demand.

The European Commission on Thursday approved a move by the German government to bail out the nation's flagship carrier Lufthansa for 6 billion euros.

Thiele was concerned that a government stake would make it hard to decide on restructuring and job cuts and had proposed an indirect government holding via Germany'sGermany's KfW development bank.

Fighting for survival after the coronavirus pandemic punctured a decades-long aviation boom, Lufthansa last month reached a deal with the German government for a package of loans and credit guarantees.

Billionaire Thiele had objected to the bailout terms and proposed an indirect government holding in Lufthansa via Germany's KfW development bank rather than a direct stake and board representation.

The 79-year-old entrepreneur, who took advantage of Lufthansa's depressed price to grow his shareholding from 5 percent in March to 15.5 percent, criticized the planned 20 percent government stake, the price at which the government is acquiring the shares, and the influence it could have on the flag carrier, including on restructuring efforts.

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Late on June 24, Thiele signaled that he would back the rescue plan as he did not want to be seen as responsible for driving Lufthansa into insolvency.

In the process, Germany reasserted itself into the heart of a company that was privatized with fanfare two decades ago and links firms like Siemens AG and Volkswagen AG with markets around the world.

Finance Minister Olaf Scholz welcomed the approval. "We are asking for nothing less than your approval to save the German Lufthansa".

Nevertheless, rival carrier Ryanair immediately announced it would challenge Lufthansa's state aid in an European Union court. The company expects its fleet to be 100 aircraft smaller after the crisis, implying the loss of over 10,000 jobs.

Securing the bailout allows Lufthansa's management to turn attention to negotiating concessions with the company's powerful labor unions.

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