Lufthansa shareholders on Thursday overwhelmingly backed a nine billion euro ($10 billion) bailout by the German government, saving Europe’s largest airline group from bankruptcy after the coronavirus crushed travel demand.
More than 98 percent of shareholders accounting for 39 percent of Lufthansa stock voted in favour of the resue package, chairman Karl-Ludwig Kley said after a special meeting held online because of the pandemic.
“We will make this work, thank you for your trust,” Kley said.
The bailout will see the German state take a 20-percent stake in the group, bringing it back on board for the first time since Lufthansa’s 1997 privatisation.
CEO Carsten Spohr had earlier described the vote as a “historic moment” that would decide the fate of the airline giant.
The approval was all but guaranteed after the group’s biggest shareholder, German rail industry tycoon Heinz Hermann Thiele, dropped his objections to the bailout hours ahead of the crunch vote.
He said although he still had doubts about the deal, which will dilute his own shareholding, he believed insolvency had to be avoided to stave off mass job losses.
Dozens of Lufthansa employees rallied at Frankfurt airport during the shareholder meeting, many wearing face masks against the virus.
“Lift us up where we belong, vote yes!” read one sign carried by a demonstrator, while another said “We are Lufthansa, we are family”.
Even with government aid, Spohr has warned Lufthansa may have to slash thousands of jobs as demand for flights is expected to stay below pre-pandemic levels for years.
But in good news for the beleaguered group, it struck a deal with German flight attendants’ union UFO late Wednesday to cut 500 million euros in costs by 2023 while avoiding cabin crew layoffs.
The savings will be achieved through measures including pay freezes, reduced flight hours, early retirement and unpaid leave, both sides said.
The deal still needs to be approved by union members but UFO spokesman Nicoley Baublies said it “brings urgently needed job security” for Lufthansa’s 22,000 flight attendants.
Spohr said talks with the VC pilots’ union were headed in a similar direction but that negotiations with the powerful Verdi union representing ground staff were “disappointing”.
Verdi and VC both hailed the shareholders’ green light, with the pilots’ union calling it a “step in the right direction” that allows for the “orderly continuation” of Lufthansa operations.
As part of its okay, the European Commission said Lufthansa would have to make room for rivals at the Frankfurt and Munich airports to ensure fair competition.
It also put limits on any Lufthansa acquisitions of competitors and banned dividends until the state aid is repaid.
Nevertheless, low-cost rival Ryanair immediately announced it would challenge Lufthansa’s rescue in an EU court.
Air travel has picked up in recent days as countries emerge from lockdown but Lufthansa’s climb out of the coronavirus storm promises to be long and arduous.
The group expects its timetable to still remain 60 percent below pre-pandemic levels come September.
Further into the future, around 100 of Lufthansa’s present fleet of 763 aircraft will likely be surplus to requirements.
Spohr told shareholders the group would “work very hard” to “repay every cent” of the bailout but cautioned that a smaller Lufthansa would emerge from the crisis.
He also acknowledged that many customers were “disappointed and upset” over the delays in getting their cancelled flights refunded after the virus prompted countries to slam their borders shut earlier this year.
“I assure you: every customer who wants a refund will get their money back,” Spohr said, vowing to clear the backlog worth hundreds of millions of euros within six weeks.
Lufthansa has also sought support from other governments to shore up subsidiaries.
Vienna has granted Austrian Airlines aid totalling 450 million euros, while Swiss and Edelweiss received loans totalling 1.2 billion euros from Bern.
Talks continue with the Belgian government over Brussels Airlines, which plans to shed 1,000 jobs.