FRANKFURT, Germany (AP) – Lufthansa shareholders have approved a $ 9 billion ($ 11 billion) bailout, with the government taking a 20% stake after management told them that the alternative was a bankruptcy claim that affected their interests would destroy.
Shareholders gave the necessary majority of more than two-thirds by voting 98.04% to 1.96% at an extraordinary general shareholders’ meeting held online with only one agenda item.
With 80% of Lufthansa’s planes aground, “we run out of money,” chairman Karl-Ludwig Kley told participants. “We live on the reserves we have set aside” in good years. “Bankruptcy will surface in the coming days without support.”
The package will ensure that the government takes a 20% stake through its economic stabilization fund and gains two seats on the board. Kley said the government intended to sell the shares as soon as possible once the airline has stabilized. The government could increase its interest to block an external acquisition. The airline will also undertake extensive restructuring to cut costs as it is expected to take years to return to normal.
CEO Carsten Spohr said the airline and its currently 138,000 employees faced a “new normal” of reduced demand that would last for years.
The company, which also owns other airlines, including Austrian Airlines and Swiss, seemed on track to get the deal approved after major shareholder Heinz-Hermann Thiele told Frankfurter Allgemeine Zeitung newspaper that he would vote for it. Thiele had previously asked questions about his approval, prompting the company to warn last week that the package could be compromised and request that all shareholders exercise their voting rights.
Hours before the meeting, Lufthansa and the UFO union, which represents cabin crew, said they had signed a deal that could save the company more than $ 500 million ($ 554 million) by the end of 2023. UFO said it provides a four-year layoff protection for cabin crew.
Meanwhile, the European Union Executive Committee approved Germany’s plans to contribute to the recapitalization of Lufthansa as part of the rescue package. He noted that Lufthansa has committed to clear a number of slots at the hubs of Frankfurt and Munich.
Moulson reported from Berlin.
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