Lufthansa repays 1.5 billion euros of state aid after cash call

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FRANKFURT (Businesshala) – Deutsche Lufthansa said on Monday it has raised a capital increase of 2.16 billion euros ($2.5 billion) and used the proceeds to repay 1.5 billion euros in state aid as it banks on a rebound in air travel. Is.

FILE PHOTO: German air carrier Lufthansa planes are photographed on the day of the airline’s annual general meeting at the airport in Frankfurt, Germany, May 4, 2021. REUTERS/Kai Pfaffenbach/File photo

The German airline paid the first of two tranches of hybrid capital, dubbed the silent partnership, it received as part of its 2020 bailout, it said.

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The company said it intends to fully repay the second tranche of 1 billion euros before the end of this year.

“Today, we are keeping our promise and paying out a larger portion of the stabilization fund earlier than expected. We are increasingly confident about the future,” said Chief Executive Officer Carsten Spohr.

He said the demand for flights, especially from business travelers, was increasing on a daily basis, although the market remained challenging.

The airline aims to clear the unused portion of the first participation tranche before the end of 2021. The state debt of 1 billion euros was repaid in February.

Lufthansa said last week its rights issue was subscribed 98.36 per cent by investors and the rest were quickly sold off in the open market.

The airline received a 9 billion euro government bailout last year to survive the COVID-19 pandemic, which resulted in the German state’s Economic Stabilization Fund (ESF) taking 15% of Lufthansa’s shares.

The stake in the rights issue was reduced to 14.09%.

Lufthansa said on Monday that ESF has committed not to sell any shares over the next six months, but will sell them in full in 24 months following the capital increase, provided the airline pays two participation installments along with other contractual requirements. .

Reporting by Ludwig Berger; Editing by Mark Potter

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