MIAMI – The German Government is selling part of the 20% stake it owns in Lufthansa (LH) as the airline group is reporting progress in recovering from the COVID-19 pandemic.
Reuters reports today that Germany’s Economic Stabilization Fund will sell up to one-quarter of its stake, which is equivalent to a 5% stake in the airline. The sale will take place over the next few weeks.
“After the measures introduced by Lufthansa started to take effect, the ESF is adjusting its holding, keeping in mind the interests of both sides,” the agency commented. It added that the sale would be dependent on market conditions.
Lufthansa received a bailout of €6bn (US$7.1bn) from the ESF last year in light of the pandemic. The government spent €300 million of that on acquiring its 20% stake. The airline has also sought financial assistance from other European governments, where its subsidiaries are based.
Lufthansa’s financials for Q2 showed that losses were narrowing due to increasing leisure travel and booming demand for cargo capacity. The airline hopes for the return of business travelers in the second half of the year.
The airline also noted that its efforts to cut €3.5bn (US$4.12bn) in costs via fleet reduction and job losses was progressing faster than anticipated.
According to sharecast.com, in December, Lufthansa agreed to a cost-cutting programm with the pilots union Vereinigung Cockpit (VC). That arrangement secures jobs through March 2022. The deal could save up to €450m (US$530m) as LH battles the impact of global travel restrictions and grounded fleets.
The deal includes an extension of shortened working hours in 2021 under the government’s Kurzarbeit scheme as well as a reduction in working hours with corresponding salary cuts and the suspension of collective pay increases.
Featured image: LUFTHANSA D-AILU AIRBUS A319 (Lu Livery). Photo: Fabrizio Spicuglia/Airways