Lufthansa shareholders on Thursday backed a nine billion euro ($10bn) government bailout, securing the future of Germany’s flagship airline after it was brought to the brink of collapse by the COVID-19 pandemic.
The plan, backed by 98 percent of the shareholder capital that cast a vote at the online meeting, will see Berlin take a 20 percent stake in Lufthansa and two board seats.
Earlier on Thursday, Lufthansa shares jumped as much as 20 percent after its top shareholder dropped his objections to the government bailout.
“I will vote for the proposal,” billionaire investor Heinz Hermann Thiele, who recently increased his stake in Lufthansa to 15.5 percent, told the Frankfurter Allgemeine daily on Wednesday.
His endorsement amounted to an 11th-hour reprieve for Germany’s flagship airline after fears had swirled he might veto the proposed rescue.
Supervisory board chairman Karl-Ludwig Kley underlined how serious the situation was as the meeting held online got under way: “We don’t have any cash left. Without support, we are threatened with insolvency in the coming days.”
Thiele’s backing will come as a relief to Chancellor Angela Merkel, who could ill afford another high-profile business collapse following the failure of payments firm Wirecard.
Lufthansa, which traces its roots back almost a century, employs about 138,000 people and owns brands including Eurowings and Austrian Airlines.
It has been brought to its knees by COVID-19 and what promises to be a protracted travel slump, and like many rivals across the world, sought state help to stay afloat. Even after Thursday’s gains, its shares are down almost 40 percent this year.
Also on Thursday, European Union regulators approved Lufthansa’s bailout deal, subject to a ban on dividends, share buybacks and some acquisitions until state support is repaid.
At 14:21 GMT, Lufthansa stocks were up approximately 9.5 percent.
Concerned a government stake would make it harder for Lufthansa to make tough decisions about restructuring and job cuts, Thiele had instead proposed an indirect government holding in the airline via Germany’s KfW development bank.
That sparked fears the bailout would fail and Lufthansa would have to seek protection from creditors within days.
Kley said there would be no political interventions from the government.
Chief Executive Carsten Spohr told the meeting the pandemic would have a lasting effect on the industry for years, adding that painful restructuring was needed.
Thiele said talks with the government on Monday had not removed his doubts, but he could not have voted for insolvency. He said he would continue to seek to influence the company’s development in the future, although declined to say how.
Thiele said it was in the interests of Lufthansa employees that management quickly negotiate restructuring with unions.
Up to 22,000 jobs could be at risk at the airline.
Spohr told Bild newspaper he wanted to avoid job losses by cutting working time and salaries for all employees, suggesting hours and wages could be reduced by a fifth.
Lufthansa struck a deal overnight with the UFO union representing German cabin crew that is set to reap more than 500 million euros ($560m) in savings, including steps to stop pay raises, cut working hours, and a cap on pension contributions.
More talks are scheduled on Friday with services union Verdi.