Lufthansa’s biggest shareholder expresses disappointment in the £8.10 billion bailout deal

In a statement on Wednesday, Lufthansa (ETR: LHA) warned that it might file for creditor protection if the majority shareholders do not vote in favour of the government bailout package on 25^th June. The German airline recently reported £1.88 billion net loss in the first quarter.  

Shares of the company posted a 2.5% intraday loss on Wednesday. At £9.21 per share, Lufthansa is currently a little under 40% down year to date in the stock market after recovering from a low of £6.43 per share in late April. Learn more about value investing strategy.

The statement was in response to criticism from German billionaire Heinz Herman Thiele who expressed disappointment in the £8.10 billion bailout on Wednesday. Hermann announced to have expanded his stake in the German flagship airline to more than 15% and hoped that Lufthansa would consider exploring alternative options. Thiele is currently serving as the honorary chairman at Knorr-Bremse.

Lufthansa’s virtual general meeting is scheduled for 25^th June

Lufthansa’s biggest shareholder said in his interview with FAZ newspaper that he was not happy with the agreement that offers two seats to the German government on Lufthansa’s supervisory board along with a 20% stake in the company.

According to Lufthansa’s executive board, attendance at the company’s virtual general meeting scheduled for 25^th June is likely to be under 50%. Lufthansa, therefore, will require at least 66% of the voters next week to extend support for the bailout package.

In the event that the deal collapses, the largest German airline might be pushed into filing for protective shield proceedings that will keep its management in charge and offer about 3 months for the company to figure out a survival plan. Lufthansa also said on Tuesday that its planned layoff will affect all units.

German finance minister says he’s pleased with the bailout package

Germany’s federal minister of finance, Olaf Scholz, responded to Thiele’s comments with a statement that expressed confidence in the deal. Scholz said he was entirely pleased with the bailout package and urged Lufthansa’s shareholders to vote in its favour.

Thiele refused to comment any further on the news. Senior member Michael Theurer of Germany’s Free Democratic Party also commented on Wednesday and said:

“The German government has taken a high-risk bet. Its wish for the government to take a direct stake in Lufthansa is putting the jobs of hundreds of thousands of Lufthansa employees at risk. It’s completely irresponsible.”

At the time of writing, the 2^nd largest European airline has a market cap of £4.35 billion.