Lufthansa: Concern About Rescue Package

Lufthansa: Concern about rescue package – share falls significantly – three scenarios for the outcome of the Annual General Meeting

On Monday, doubts about the success of the Lufthansa rescue pushed the airline’s shares down significantly. Concerns about the rescue package recently depressed the Dax relegation papers by 5.70 percent to EUR 9.59. In early trading, the shares had even dropped by almost 9 percent.

Severe losses during the Corona crash had led to the stocks having to move their place in the leading German index and since Monday belong to the MDax, in which they now recorded the highest price losses on that day among the 60 members.

Around two weeks ago, Lufthansa shares had risen to EUR 12.56 in the course of their recovery rally. This had made them more expensive by more than 76 percent since mid-May, benefiting from the decision to relax travel restrictions. However, unlike the overall market, Lufthansa shares have been in crisis since the beginning of 2018. At that time they had reached a record high at EUR 31.26.

Lufthansa is afraid of an uncertain outcome, including bankruptcy, in view of a low-expected shareholder presence at the Annual General Meeting this Thursday. After the registrations of the shareholders, approval for the nine billion euro state aid is on the brink.

“We have known since tonight that our shareholders have registered less than 38 percent of the capital for this Annual General Meeting,” said a letter from Lufthansa CEO Carsten Spohr to the employees on Sunday.

This means above all Lufthansa major shareholder Heinz Hermann Thiele, who recently held a good 15 percent of the shares and viewed government aid with skepticism. He sees the planned participation of the federal government with up to 20 percent of the Lufthansa shares critically and wants renegotiations. He left his approval of the rescue package open. A market participant anticipates a tough struggle, at the end of which the investor could prevail – for fear of the federal government against massive job losses.

According to Dirk Schlamp from DZ Bank, Thiele has tipped the scales after he increased his stake. If he does not agree to the rescue plan, the package should fail, the analyst states. However, Thiele may also use the heightened and scattered uncertainty to buy more Lufthansa shares and will then vote for the rescue package. Insolvency under self-administration would mean a significant loss in value of his Lufthansa stake. In the event of subsequent regular bankruptcy, there could even be a total loss.

Schlamp sees a glimmer of hope in the form of a possible compromise in the upcoming crisis meeting between Federal Minister of Finance Scholz, CEO Spohr and Thiele.

Editor’s note: This article is for reference only and does not constitute an offer, solicitation or invitation, inducement, any representation regardless of type or form, or make any suggestions and recommendations. Readers should use their independent thinking ability to make their own investment decisions If any losses are incurred due to the relevant recommendations, it has nothing to do with Lean Financial Media, the editor and the author.

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