€9 Billion In Government Aid Due To Help Lufthansa

On Monday, the German federal government agreed on a €9 billion ($9.74billion) rescue package for flag-carrier Lufthansa. In return, it has asked for a blocking minority, and one or two supervisory board mandates. Germany’s flight attendants’ union is not happy with the conditions, which it says are not enough to protect workers.

Lufthansa A380 at Johannesburg
Lufthansa and the German government have reached an agreement on a €9 billion package. Photo: Getty Images

A seat at the table for the state

As reported by the German edition of Business Insider on Tuesday morning, Lufthansa, currently making about €1 million ($1.09 million) in losses per hour, is finally being granted a lifeline from the German government. In exchange, it wants a seat at the table.

The €9 billion bailout agreed on in a meeting on Monday comes with certain conditions. The struggling airline has previously been unwilling to offer up any say for the state when it comes to company policy in return for funds. However, the possibility of facing bankruptcy within a few weeks seems to have shifted perspectives.

The state will now receive a blocking minority and one or two supervisory board mandates as new shareholders. Civil servants or politicians must not occupy these seats, Lufthansa has reportedly insisted.

Simple Flying reached out to Lufthansa, but the airline declined to comment at this stage.

Lufthansa A330
CEO Spohr and Chancellor Merkel will finalize the terms of the bailout. Photo: Lufthansa

Union wants more conditions

The rescue package is reported to be finalized by Chancellor Angela Merkel, Finance Minister Olaf Scholz, and Lufthansa CEO Carsten Spohr (not present during negotiations) later today. However, more stakeholders would have liked to have had a say in its final version.

The Frankfurt-based Independent Flight Attendant Organisation (UFO), issued a press release on Monday in response to the information surfacing that a deal was about to be made. In it, it called on the government to do more to make sure the money would go where it is most needed, and to protect workers. The stipulated conditions are not enough, they say.

“Blocking minorities and supervisory board mandates are more of a symbolic policy and only suggest interference in day-to-day business instead of creating a social framework with previously clearly agreed principles,” according to Nicoley Baublies, UFO’s Managing Director.

Lufthansa, Cabin Crew, Christmas Strike
The UFO says the conditions are not enough to protect the interests of employees. Photo: Lufthansa Group

Climate goals and “regulatory chaos”

In a position paper sent to the German government, UFO poses eight points the state needs to take into account when offering aid for the aviation industry. Among these is the long-term safeguarding of jobs and employee participation in decision making.

The paper also requests that while an airline is receiving state support, no dividends are distributed to shareholders and that no additional bonuses of any kind should be paid to top management.

Furthermore, it requests that when air traffic is reconstructed after the crisis, it should be done so with efforts to address climate goals, competition imbalances, and “regulatory chaos.”

Awaiting announcements

Just yesterday, a €550 million (US$595 million) relief package was approved for Lufthansa’s compatriot Condor. No specific terms or conditions other than the ratio of aid versus refinancing were made public.

If the state-aid package is finalized by Chancellor Merkel and CEO Spohr today, we will surely soon have more details on the agreement, and statements from both airline and government representatives.

What conditions do you think governments should make for airlines to receive state-aid during this time of crisis? Let us know your thoughts in the comments.