MercoPress. South Atlantic News Agency

Germany to sell its Lufthansa shares acquired during the pandemic

The German flag carrier received a €9 billion package in June 2020. Since then it has cut 30,000 jobs, and the fleet will be reduced from 800 to 650 aircraft

The German Finance Agency has announced that in the coming weeks it will proceed to the sale of the state's 20% stake in the flag carrier Lufthansa, which it acquired in the midst of the pandemic to help impede the collapse of the company.

The aviation sector was among the hardest hit by the coronavirus and consequences are still in the air. The 20% stake last year was acquired at some €300 million

In March 2020, Germany established an Economic Stabilization Fund, WSF, to stabilize major German companies and preserve jobs. In the case of Lufthansa, the total bailout package was €9 billion, including a €5.7 billion silent capital contribution plus the €300 million share package. The remaining €3 billion was to be lent by the state-owned development bank KfW.

The deal considered a temporary measure effectively saved the airline from bankruptcy in June 2020, and it was agreed that WSF would be selling the stake share, currently close to a billion Euros before 2024.

The airline has also implemented strict cost-cutting measures including 30,000 jobs less and the fleet will be reduced from 800 to 650 aircraft by 2023. This has helped the company halve its losses in the second quarter of this year compared to 2020 and expects to return to profits within most probably in twelve months as restrictions are easing and more passengers flying.

The German government and Lufthansa have said they want the company to regain financial independence as soon as possible.