Airline Lufthansa hopeful for German state aid deal

Europe's biggest airline group had warned it was bleeding cash

German airline Lufthansa said it was close to an aid deal with the German government after Covid-19 kept its aircraft on the ground. AFP

Europe's biggest airline group Lufthansa said Sunday it was close to a deal with the German government on state aid to ease the impact of the coronavirus crisis.

The group, which says it is bleeding cash, had appeared to be stalled in its bid for up to 10 billion euros in aid, according to a report in the weekly Der Spiegel.

But in a note from Lufthansa directors to staff seen by AFP, the company said it has held “intense and constructive exchanges” with the German government on the financial help.

“In our view these discussions could be concluded in the near future,” it said.

“Support from the German state constitutes an essential step towards ensuring our future,” it said, as Europe begins to ease measures taken to stem the spread of Covid-19.

Like other airlines worldwide, Lufthansa and its subsidiaries that include Swiss and Austrian Airlines have been essentially grounded and face an uncertain future once their operations are fully up and running again.

Lufthansa said its group sales in March fell by almost 50 percent or 1.4 billion euros from the same month a year earlier.

In April, chief executive Carsten Spohr said the group was carrying fewer than 3,000 passengers daily compared with a pre-pandemic average of around 350,000 a day.

“We are losing about a million euros in liquidity reserves per hour. Day and night. Week by week,” Mr Spohr warned.

According to Der Spiegel, the German government is holding out for a stake of just over 25 percent in the group in exchange for financial aid, which would put Berlin in a position to block strategic decisions by Lufthansa management.

Swiss authorities have already agreed to guarantee loans of up to 1.2 billion euros to Lufthansa, while Austrian Airlines has asked the government in Vienna for 767 million euros in state aid.

The group’s supervisory board is to meet on Monday, and hold an online general assembly a day later.