Lufthansa shareholders decided on Tuesday not to pay €298 million ($323 million) in retained earnings as a dividend for 2019, as the carrier is entering the final negotiation phase for a €10 billion bailout.
Lufthansa needs to be saved after coronavirus travel bans forced the German airline to ground 700 of its planes, resulting in a 99 per cent decline in the number of passengers and causing the airline to lose around EUR 1 million ($1.1 million) in liquidity reserves per hour.
The meeting was attended online by some 10,000 shareholders, representing 33.19 percent of the share capital, Lufthansa said. The airline, which is planning to slowly rebuild passenger flights from June, is currently in negotiations with the German, Austrian, Swiss and Belgian authorities for a bailout of around EUR 10 billion. Chief Executive Carsten Spohr said he expected an agreement with Germany to be reached soon.
"Our attention is not on acquiring other airlines but on stabilizing Lufthansa in its present shape. At this time, we are not planning a takeover, "he said, adding that consolidation of European airlines would slow down because of government bailouts. The rescue deal by Lufthansa is expected to give Germany a 25.1 percent stake in the airline, as well as representation on the supervisory board, said people close to the matter.
Lufthansa is projected to receive approximately €5 billion in non-voting capital as well as approximately €3 billion in government-backed loans, they added. The precise scale of the rescue package and the potential commitment from Switzerland, Austria and Belgium remain unknown, the sources said. According to Belgian daily L'Echo, Spohr is due to visit Brussels this week. The airline is seeking EUR 290 million from the Belgian state for financial assistance. In return, Belgium wants guarantees on the future of Brussels Airlines and the Brussels Airport growth.
Spohr said the German government was not involved in taking an active part in the business following the rescue, after he had previously cautioned about potential state involvement. At a ministry briefing on Tuesday, Klaus Schmidt, Head of the Council of Economic Advisors to the Federal Economy Ministry, said the government would not weigh into negotiations, for example about whether to shut down Lufthansa's Germanwings division.
To minimize its cash outflows, Lufthansa — which is taking a €1 billion hit from crude oil hedging in 2020 — said at the meeting that it had requested Airbus and Boeing to delay deliveries of aircraft. Lufthansa is sticking to its intention to sell its catering operations, Spohr said, adding that more asset sales have not been scheduled and a future ipo of its Lufthansa Technik company will only be possible at a significant discount at present.
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