As Lufthansa bailout talks continue, role of German state at issue - Metro US

As Lufthansa bailout talks continue, role of German state at issue

FILE PHOTO: Outbreak of the coronavirus disease (COVID-19) in Frankfurt

BERLIN (Reuters) – As Lufthansa <LHAG.DE> negotiates a 9 billion euro bailout to tide it through the coronavirus pandemic, a senior Finance Ministry official said on Friday that the German state should turn a profit when it steps in to rescue the nation’s companies.

Losses cannot be dumped on the state and taxpayers must be adequately compensated, Joerg Kukies, a deputy finance minister and a former investment banker at Goldman Sachs, said.

“The state is acting here as a self-confident investor,” he said at an event.

In the case of Lufthansa, the state’s exact shareholding and its ability to exert influence over the airline group are still being negotiated.

The company is seeking to tap Germany’s economic stabilisation fund to help it weather the the pandemic and what is expected to be a protracted travel slump.

Transport Minister Andreas Scheuer said separately that the talks are “intensive” and still ongoing. “I can’t give you a date or a result,” he said.

Lufthansa has said the bailout may include a non-voting capital component, known as a so-called silent participation, a secured loan, and a capital increase that may leave the government with a shareholding of up to 25% plus one share, the company said.

Some senior politicians continued to voice deep scepticism about the plan.

Markus Soeder, head of the Christian Social Union (CSU) – the sister party to Chancellor Angela Merkel’s Christian Democrats (CDU) and part of the federal coalition – said semi-nationalization would mean that the state would have a say in routes and wage negotiations, which would be wrong.

“The last word has not been spoken,” he said on Friday.

Lufthansa plans to resume flights to destinations including Los Angeles, Toronto and Mumbai next month as it begins to restore some of the capacity grounded by the coronavirus crisis, the airline said on Thursday.

(Reporting by Christian Kraemer, Markus Wacket, and Andreas Rinke; Writing by Tom Sims; Editing by Frances Kerry)

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