FRANKFURT – At the start of the pandemic, Lufthansa lost one million euros per hour. The state jumped in favor of Lufthansa with no credit lines and silent participation. Lufthansa deposited its shares as security. This rescue deal wasn’t without risk for the taxpayer — but it was worth it.
Two years after Lufthansa’s spectacular rescue, the German state has sold the last of its shares in the airline group. The Federal Economic Stabilization Fund (WSF) realized a profit of 760 million euros.
A portion of the shares went to logistics entrepreneur Claus-Michael Kühne, who, as the largest single shareholder in MDX Group, increased his stake to 17.5 percent. Lufthansa boss Carsten Spohr on Wednesday again thanked the federal government and taxpayers for their support in the company’s worst crisis.
The Federal Finance Agency announced in Frankfurt on Tuesday evening that the federal government had liquidated a stake in Lufthansa it had formed during the Corona crisis. At EUR 1.07 billion, the total income from the block of shares significantly exceeded the invested amount of EUR 306 million.
In June 2020, WSF took possession of a good 20 percent of all Lufthansa shares through a capital increase and had to pay only the nominal value of €2.56 per share. Most of the gains that have now been realized can be explained by the difference in the current high stock exchange price of around 6 euros.
According to Lufthansa, it paid 92 million euros in interest for loans from the German state and silent participation. These have already been fully refunded by November 2021.
Silent Partnerships I and II, from which Lufthansa at times had drawn 2.5 billion euros, had an interest of about 4.0 percent. In addition, Lufthansa paid out a coupon of 19 million euros in 2021.
“Lufthansa is once again in private hands,” Spohr said. With the premature end of state participation, which should have lasted till October 2023, the company is returning to a complete normalcy.
Since the repayment of the tacit partnership in November 2021, managers have been allowed to pay bonuses again and, in future, dividends to owners as well. Acquisitions of foreign airlines are also possible again, although Lufthansa has recently lagged behind Italian Alitalia successor ITA.
What’s new, however, is the growing effect of shareholder nudge. Although he has announced in interviews that he wants to stay out of the operating business, “Handelsblatt” reports that he aims for at least one seat on the supervisory board. Kuhne’s confidant Karl Gernandt is to be transferred to the Control Committee at the latest general meeting on May 9, 2023. The Hamburg billionaire’s Swiss Kuhn Holding AG declined to comment.
During the state involvement, which is now defunct, Lufthansa appointed two supervisory boards, which were to take into account the interests of the WSF. It was Hamburg port owner Angela Titzrath and former Munich airport owner Michael Kerkloh. According to the company, both are well appointed and do not have to resign on their own.
Lufthansa sells silverware
The company leaves the care of the state with a high level of debt because the costly state aid was replaced with money from private donors after the risk of bankruptcy had passed. With the partial sale of Lufthansa Technik, the group is looking to earn billions for debt reduction.
The aid from Switzerland has now been repaid – Switzerland has earned about 60 million francs in interest and fees.
Spohr had always insisted that he would be indebted to the capital market rather than to the taxpayer. State aid from Austria (210 million euros) and Belgium (287 million euros) is still open, as the company announced in its most recent quarterly report.
Germany, Austria, Switzerland and Belgium took the wings of the Lufthansa group after air traffic came to a standstill due to the Corona epidemic. In all, he promised the group nine billion euros, with the lion’s share of the amount coming from Germany, Lufthansa’s home country.
WSF accounted for six billion euros, including the block of shares, while state-owned KfW Bank contributed one billion euros in loans. Lufthansa had not liquidated a total of 9.0 billion euros.
