Lufthansa: Government fund approves 9 billion euros in aid

FRANKFURT, Germany (AP) — German airline Lufthansa said Monday it has received approval for a 9 billion-euro ($9.8 billion) "stabilization package” from a government support fund to keep the company going through the turbulence from the coronavirus outbreak, but cautions the deal has not been approved by the European Union's executive commission.

Lufthansa, which has lost most of its passenger business due to travel restrictions during the outbreak, said the government's fund has agreed to take non-voting holdings in return for 5.7 billion euros, plus a 3 billion-euro credit line and 300 million euros in share purchases.

That would leave the government fund with a 20% stake in the company and two seats on the board of directors. One of those seats would be on the audit committee. The airline said however that the government agreed not to vote at shareholder meetings unless there was a takeover of the company.

The government’s stake is below the level needed to block major decisions, but it has the option to raise it to a blocking stake of 25% plus one share in case of an attempted takeover of the company.

The company's trading statement said that the deal has not been approved by the European Commission, which could set conditions intended to preserve fair competition. The aid package would also require approval by a shareholder meeting.

German business publication Handelsblatt said that German Chancellor Angela Merkel was resisting a push by the commission to make Lufthansa give up prized landing slots at its Frankfurt and Munich hubs.