Frankfurt, Sept. 20 (BNA): Lufthansa has announced a capital increase of 2.14 billion euros ($2.5 billion) as part of an effort to pay back German state aid during the pandemic.
Germany’s largest airline, which has emerged from a crisis in the aviation sector during the pandemic, is preparing to use the proceeds of new shares to pay off the 9 billion euros provided by four countries to overcome the crisis, the German news agency (dpa) reported.
The price has been set at €3.58 per new share, with new shares expected to be offered to shareholders in the subscription period from September 22 to October 5.
Lufthansa intends to use the net proceeds to repay 1.5 billion euros to the German Economic Stability Fund (WSF), followed by another billion euros in full by the end of the year.
In August, Lufthansa said it halved its losses in the second quarter, compared to the second quarter of 2020, hit by the pandemic.
Lufthansa CEO Carsten Spohr said only recently that he still wanted to settle the German state aid reimbursement with the current German government.
The company has already repaid a €1 billion loan from the state-owned KfW Investment and Development Bank.
Paying off all government aid is also a prerequisite for further mergers and acquisitions among European airlines. As long as firms in the industry are subsidized by the state, they are prohibited from merging.
Even before the coronavirus crisis, Spohr said, it was clear there would be more consolidation. Crisis has pressed, so to speak, the pause button in the process.
“The moment this government aid is paid, the pause button will be back in play,” he said. “Because we have a lot of airlines in Europe.”
German voters are due to head to the polls in the federal election on September 26, after which the parties are expected to need a new three-way coalition in order to form a majority.