LUFTHANSA BAILOUT SHOWDOWN WITH INVESTOR LOOMS

Lufthansa will seek to avoid a grounding and insolvency, Chief Executive Carsten Spohr said on Sunday, before a showdown between the airline’s biggest shareholder and the German government over the terms of a 9-billion-euro bailout. The German flag carrier has been hard hit by what is expected to be a protracted travel slump because of the COVID-19 pandemic, forcing it to seek a bailout.

Billionaire shareholder Heinz Hermann Thiele will meet the economics minister on Monday to discuss his objections to the state-backed bailout, a source close to the matter told Ilona Wissenbach, Holger Hansen, Rene Wagner and Joern Poltz of Reuters.

As an alternative to the government taking a direct stake in Lufthansa, Thiele has proposed an indirect participation through state-owned German development bank KfW. In a letter to employees, Spohr said the airline was in intense talks with the government and large shareholders which had “the clear goal of finding a satisfactory solution for our company and all participants before Thursday,” when an extraordinary shareholder meeting will be held.

Expressing his desire to avoid a grounding or insolvency, he said: “I am sure this is an objective which unites all parties.” Lufthansa warned last week that a failure to secure shareholder approval for the bailout could force it to apply for protection from creditors under German insolvency law.