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Lufthansa machines at Frankfurt Airport: Many of the airline’s jets are still on the ground.
(Photo: Kai Pfaffenbach / Reuters)
In emergencies, the German state backed Lufthansa with billions in aid last year. The German airline had struggled to feel the effects of the Corona crisis, hardly anyone was traveling yet, and global air traffic almost completely collapsed. In particular, on the routes from Europe to Asia and the United States, sometimes nothing happened at all. But these routes are the main source of profit for Lufthansa.
Now, a good year and a half after the outbreak of the pandemic, the group has repaid more of the corona state aid. The airline announced that a tacit stake of 1.5 billion euros had been fully bought. The money comes from a capital increase which brought in 2.162 billion euros and which has now been completed. All aid should be repaid by the end of the year. The federal government had also taken a direct stake in Lufthansa, currently the stake is still 14%. The participation must be returned within 24 months from the full repayment of the aid, in accordance with the agreement when the federal government joined the company.
Lufthansa action was 3% in the red on Tuesday at around 5.80 euros. The new shares have been listed on the Frankfurt Stock Exchange since this week. The capital increase is now complete.
“We are very grateful that Deutsche Lufthansa AG has been stabilized with tax revenue in the most difficult times,” said Lufthansa boss Carsten Spohr. “We are increasingly optimistic about the future.” More and more countries are opening their borders and the demand for air travel is increasing every day. Lufthansa had received a total of 2.5 billion euros from the Economic Stabilization Fund (FSM) through two silent participations. A loan from the public development bank KfW in the amount of one billion euros had already been repaid in early February 2021.
The repayment will be made much faster than expected at the start of the previous year. International air traffic has not recovered as quickly as expected. The United States did not open its borders to all air travelers this summer, but is only doing so now. Business travelers have always been the main source of income for the airline, which also includes Swiss and Austrian Airlines.
State aid has also been costly for Lufthansa. Aid loans carried high interest rates. In the first year Lufthansa had to pay four percent for this, this year five percent the rate would have increased further. At the same time, conditions had to be accepted, for example with regard to bonuses for managers.