Lufthansa will Leave the Dax

Lufthansa will leave the Dax and go down to the ‘second division’ of the German Stock Exchanges due to the impact of the coronavirus.

The airline’s shares have plummeted during the crisis and its economic situation has forced the German government to launch a rescue package of 9,000 million euros.

The impact of the coronavirus on airlines continues to take its toll on the German Lufthansa, whose punishment on the stock market has caused it to stop trading on the Dax 30 in Frankfurt – the country’s main reference index – as of June 22 due to the drastic drop in his actions. Drawing on a footballing simile, the company descends into the second division of the German stock markets.

Its place will be occupied by the Berlin real estate consortium Deutsche Wohnen, while the airline, which was a founding member of the Dax 32 years ago, will be listed on the MDAX index of medium-sized companies.

The company’s shares have lost almost 28.5% since the crisis caused by the Covid-19 broke out in the stock markets in mid-February, although in recent sessions it has regained part of the ground in the heat of the general increases by the reactivation of economies and the reopening plans for tourism. The decline has left the price of its titles at 10.9 euros and its prospects for the coming months are complicated.

The board of directors and the Supervisory Board of Lufthansa gave their approval, last Saturday and Monday, respectively, to the rescue plan that involves the assignment of 24 slots, that is, take-off and landing rights in certain time zones, in the Frankfurt and Munich airports, as reported by the Efe agency.

The group recorded a net loss of 2.1 billion euros in the first quarter of this year, six times that of a year ago, and an operating loss before extraordinary of 1.2 billion as a result of global restrictions on air traffic due to the pandemic.

The restrictions are still in force and their impact will be reflected in the next quarterly results. However, the situation is so delicate that the German Government itself has had to come to the rescue of its viability with a package of 9,000 million euros that has made it the main shareholder of the company, with a 20% stake in its Capital expandable up to 25% and two seats on its supervisory board.

To meet the bailout, the company has announced a major restructuring that involves increasing annual free cash flow, cutting employee expenses, delaying or canceling maintenance projects, or restructuring other airlines in the group, such as Austrian Airlines and Brussels Airlines.

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Lufthansa will leave the Dax and go down to the 'second division' of the German Stock Exchanges due to the impact of the coronavirus.

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