Lufthansa Pays Back $1.7 Billion of Germany’s Silent Stake
(Bloomberg) -- Deutsche Lufthansa AG paid off a chunk of the German government’s remaining bailout package, eliminating part of its so-called silent participation support with 1.5 billion euros ($1.7 billion) of the money it raised in a rights offering last week.
The 2.16 billion-euro equity raise is now completed and new shares issued, Lufthansa said Monday in a statement. The company plans to repay a remaining 1-billion-euro silent participation to Germany’s Economic Stabilization Fund by year-end.
Chief Executive Officer Carsten Spohr is racing to free Europe’s biggest airline from government strings before Chancellor Angela Merkel leaves office. With her Christian Democrats set to lose power, Lufthansa faces a new government that may not be as accommodating. Germany saved the airline with a 9 billion-euro rescue after the coronavirus pandemic battered airlines worldwide.
“We are very grateful that Deutsche Lufthansa AG was stabilized with tax money in the most challenging of times,” Spohr said in the statement, adding that the intervention saved more than 100,000 jobs.
The funds are being paid back earlier than the company expected, and with more countries opening their borders, “we are increasingly confident about the future,” Spohr said.
The government still owns a 14% stake, which is to be sold within two years after the capital increase, as long as the silent participations are repaid. The airline pays interest on the hybrid debt-equity securities, with payments set to rise steeply in coming years.
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