Government financial aid for Cargolux
LUXEMBOURG – The transport airline Cargolux will receive a 100 million euro financial guarantee from the state.
Cargolux shareholders and the Luxembourg government have agreed on a rescue plan for the financially challenged airline.
On Monday a meeting was held between the airline shareholders and the government and a capital increase of 100 million dollars (75 million euros) was confirmed by the group. The group has registered a 100 million euro loss this year, and the state has therefore agreed to lend Cargolux a further 100 million euros.
The record losses are mostly due to the economical and financial crisis since the demand has decreased brutally. The freight rates have dropped dramatically since the beginning of the economic crisis and they are currently 30% lower than beforehand. In the first 9 months of 2009, Cargolux activity has dropped about 12% compared to 2008.