German flag carrier Lufthansa has repaid in full its €9 billion ($10 billion) loan under the German government’s Economic Stabilization Fund (ESF). The repayment completed early, and cancelation of all outstanding loan facilities means the silent participation has ended and the ESF will now sell its stake in the airline.

Lufthansa Airbus A350-941 D-AIXL (4)
Lufthansa's loan is all paid off. Photo: Vincenzo Pace | Simple Flying.

Repaid in full

German airline Lufthansa was on the receiving end of one of the industry’s largest bailouts, back when the COVID crisis was at its peak. At least, that’s what opponents to this sort of state support would have you believe. What Lufthansa actually received was a loan, repayable in full, which came with a bunch of very tight strings attached.

Not least, Lufthansa’s aid came with partial state ownership of the Group. Although this was to be ‘silent participation’, it still meant the airline was beholden to the whim of the German government, something CEO Carsten Spohr was not very pleased about. Indeed, he said at one point that he would rather have the airline go bankrupt than allow it to become a state asset.

Nevertheless, with no other option on the table, Lufthansa did indeed take the loan, and agreed to the silent participation of the German state. In total, the airline group had €9 billion ($10 billion) awarded to it to see it through the crisis.

Lufthansa, Loss, Improving
The airline's loss fell by half year on year. Photo: Vincenzo Pace - Simple Flying

Today, Lufthansa is free from this burden, as the airline has confirmed it has repaid all of the money awarded to it, and has canceled the portion of the loan that was still unused. The airline had already repaid part 1 of the Economic Stabilization Fund (ESF) in October, and today cleared the balance of Part 2 of the loan facility.

In a statement today, CEO of the Lufthansa Group, Carsten Spohr, commented,

"On behalf of all Lufthansa employees, I would like to thank the German government and the German taxpayers. In the most serious financial crisis in our company's history, they have given us a perspective for the future. This has enabled us to save more than 100,000 jobs. We are proud that we were able to keep our promise earlier than expected and repay the German financial aid.”

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Less than half drawn down

While plenty of noise was made about the huge total bailout granted by the state, the Lufthansa Group has drawn down on less than half the awarded amount. In total, of the $10 billion allocated, the company drew down just €3.8 billion ($4.3 billion) and has returned the rest unused.

Less than half of the facility was used by the Group. Photo: Vincenzo Pace | Simple Flying.

Lufthansa says that this has been made possible by a combination of rising demand for air travel, its own rapid restructuring of the company, and the renewed confidence of the capital markets in the airline. While this is all positive news, Lufthansa’s CEO knows that the airline is not entirely out of the woods yet. Spohr continued,

“Lufthansa was able to rely on Germany and Germany can rely on Lufthansa. Many challenges remain. Our ambition is to strengthen our position among the world's leading airline groups. To this end, we will consistently continue the restructuring and transformation of the company.”

With the ESF paid back, including the interest, all German loans, and silent participation have been effectively canceled. The ESF will now look to sell its stake in Lufthansa – a share of around 14% - by October next year at the latest.