Thursday 28 Mar 2024
By
main news image

LONDON/FRANKFURT (June 2): Deutsche Lufthansa AG shares surged after Europe’s biggest airline overcame most of the barriers to receiving a €9 billion bailout from the German government.

The stock gained as much as 8.3% and was priced 6.6% higher at €9.75 as of 9.04am today, the first day of trading on the Frankfurt bourse since last week.

Barriers to the rescue began to crumble late last Friday, with Lufthansa agreeing to hand over operating slots at its main hubs to win European Union backing for the deal. Its supervisory board approved the compromise in a vote yesterday.

Lufthansa is seeking emergency aid after the Covid-19 pandemic punctured a decades-long aviation boom, grounding flights and draining cash reserves. The company expects its fleet to be 100 aircraft smaller following the crisis, implying the loss of 10,000 jobs.

While investors still need to vote on a package that will dilute their holdings at a meeting on June 25, analysts said they are likely to grant their approval rather than see Lufthansa slide towards insolvency.

The EU still has to approve other aspects of a deal that will make Germany Lufthansa’s biggest shareholder, thrusting the state back into the heart of company privatised with fanfare over two decades ago.

Under the compromise with the EU, Lufthansa will reduce its presence in Frankfurt and Munich by four aircraft apiece and surrender enough slots for 12 daily return flights, offering new challengers a toehold at its fortress hubs.

Lufthansa will publish first-quarter earnings tomorrow.

      Print
      Text Size
      Share