Lufthansa’s biggest shareholder, billionaire Heinz Hermann Thiele, is set to meet Germany’s economics minister on Monday to discuss a government bailout to the tune of roughly €9 billion (US$10.07 billion). The Monday meeting will include Thiele, Lufthansa Chief Executive Officer Carsten Spohr, and the two German ministers who brokered the deal: Finance Minister Olaf Scholz and Economy Minister Peter Altmaier.
Shareholders must approve bailout terms
The German Government has laid out its offer and the ‘strings’ attached to the deal, which include a 20% direct stake in the company and two seats on the airline’s supervisory board. Thiele, who has a 15.5% stake in the company, is not in support of the Government’s offer and the conditions attached.
However, the bailout requires the support of more than two-thirds of shareholders. This means that Thiele’s support carries a significant amount of weight and may shape the future of Lufthansa.
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With Thiele unsupportive of the Government’s offer, the billionaire has instead proposed indirect state participation through the state-owned German development bank, KfW.
This would certainly limit the amount of future government involvement when it comes to Lufthansa’s decisions in a post-pandemic world.
According to Reuters, Spohr wrote a letter to airline employees saying that intense talks are underway with the Government and large shareholders which have “the clear goal of finding a satisfactory solution for our company and all participants before Thursday,” – this is when an extraordinary shareholder meeting will be held.
Lufthansa’s leadership has warned that if shareholders do not come to an agreement to accept a bailout, insolvency will follow. According to Bloomberg, unions, numerous investors, and proxy advisory firms all recommend that shareholders back the deal.
About Heinz Hermann Thiele
According to Forbes, 79-year-old Heinz Hermann Thiele and his family’s wealth ranks 91st on the list of wealthiest people in the world in 2020. As of the time of writing this article, Thiele’s “real-time net worth” is valued at $14.6 billion.
Thiele’s company, Knorr-Bremse AG, is the world’s leading manufacturer of braking systems for rail and commercial vehicles.
Forbes goes on to note that Thiele came from modest means but worked his way through law school to join the firm’s legal department in the late 1960s. 20 years later, in the mid-1980s, he took control of the company. Bloomberg notes that at one point in his life Thiele was a former army tank commander.
Do you think the Government will be amenable to the counter-offer of funding through the state-owned development bank without direct participation? Or will it insist on having direct ownership? And what do you think is better for the airline? Let us know your thoughts in the comments.