German government sells a quarter of its stake in Lufthansa | News | DW

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Germany has announced plans to sell up to a quarter of its stake in Lufthansa.

The German financial agency said the move would take place in the coming weeks and cited a positive development for the airline.

Shares fell as much as 4.9% after the announcement. The state’s 20% stake was acquired for 300 million euros ($ 353 million).

Lufthansa bailout

The aviation sector has been among the hardest hit by the coronavirus pandemic. The federal government initially announced the 20% stake to help the airline mitigate the effects of the global pandemic.

This investment was made via the Economic Stabilization Fund (FSM), created in March 2020. The main objective of the fund was to stabilize large German companies and, in doing so, to preserve jobs.

Of a total bailout plan of 9 billion euros, 5.7 billion euros was a silent capital injection from the state, as well as a 300 million euros action plan. The remaining 3 billion euros would be loaned by the public development bank KfW.

The bailout effectively saved the airline from bankruptcy in June 2020.
The aid was to be a temporary measure, and the WSF announced that it would sell the entire stake, currently valued at $ 1 billion, before the end of 2023.

The German government and the airline have said they want the company to regain tax independence as soon as possible.

Cost reduction measures for national carriers

Lufthansa managed to halve its losses in the second quarter of 2021 compared to the same period last year. This happened when travel restrictions started to ease and more passengers took to the skies.

The airline has recorded positive cash flow since the onset of the coronavirus crisis and expects a return to profitability by this year.

The airline has also undergone stringent cost-cutting measures to help consolidate its finances. There have been more than 30,000 job cuts and the fleet of 800 aircraft will be reduced to 650 by 2023.

kb / rs (dpa, Reuters)


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