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-   -   Lufthansa board reject € 9 Bn rescue plan (https://www.pprune.org/rumours-news/632801-lufthansa-board-reject-9-bn-rescue-plan.html)

Tartiflette Fan 27th May 2020 17:19

Lufthansa board reject € 9 Bn rescue plan
 
The LH supervisory board ( Aufsichtsrat ) has reportedly rejected the plan because the conditions imposed by the EU ( giving up slots in Frankfurt and Munich ) were too detrimental to the business. I'm too new to post a link, so here is the relevant text from the FAZ.

"Aufsichtsrat der Lufthansa habe dem neun Milliarden Euro schweren Stabilisierungspaket des Staates am Mittwoch wegen Auflagen der EU nicht zugestimmt.

Die von der Wettbewerbsbehörde geforderten Auflagen bedeuteten eine Schwächung der Drehkreuze an den Flughäfen München und Frankfurt, teilte die Fluggesellschaft zur Begründung mit. Die daraus resultierenden wirtschaftlichen Auswirkungen sowie mögliche Alternativszenarien müssten intensiv geprüft werden. „Vor diesem Hintergrund hat der Aufsichtsrat dem Stabilisierungspaket in Zusammenhang mit den EU Auflagen nicht zustimmen können.“

733driver 27th May 2020 19:44

To be fair, they haven't exactly rejected the plan. They just haven't approved it (yet). They say they need some time to analyze the implications.

Tartiflette Fan 27th May 2020 20:39

Yes, you are correct to say that, however I think it's clear from the rest of the article that that is just some diplomatic flim-flam to help them get a better deal. The article says that the German side of the deal ( German government/Lufthansa ) was only finalised on Monday, and also quotes the responsible German minister as saying that they are going to push Brussels hard, so that it doesn't undermine the industry. In such circumstances it is normal not to unnecessarily antagonise the other parties ( unless you are MOL ), so by their actions LH are making it easy for the Bundesregierung to go back to Brussels and say " We told you not to be too hard on them, they have turned it down "

I suppose it makes the situation even more complicated that the discussions over the huge EU grant/loan package (mainly for S Europe ) is being hotly discussed and Germany is currently in the middle between the "Frugal Four " and the "Club Med " ( just to stay in tabloid vernacular ) states and, additionally , there was that momentous BVG ( Constitutional Court ) decision just a few weeks ago.

Denti 28th May 2020 14:08

Lufthansa always had a plan B, which is going through the german chapter 11 process (Planinsolvenz in Eigenverwaltung). That would allow them to get the pension pots and there is more than enough money in that pot to weather this storm. An additional bonus would be of course that they could finally get some real concessions from their unions. Will be quite interesting to see that unfold.

Even more interesting is however that france, netherlands and germany are quite willing to give their aviation sectors huge bailouts, while apparently the UK is not. Putting all UK airlines at a distinct disatvantage.

the_stranger 28th May 2020 15:09


Originally Posted by Denti (Post 10795809)

Even more interesting is however that france, netherlands and germany are quite willing to give their aviation sectors huge bailouts, while apparently the UK is not. Putting all UK airlines at a distinct disatvantage.

Just to clarify, the Dutch government isn't giving KLM money, they broker a loan for them at commercial banks.

Only in case of KLM not being able to pay back the loans, the government will pick up the tab. But for now there are only commercial loans (against a rather high interest, if rumours are true).
Of course the government do pose strict demands on KLM for this help.

Tartiflette Fan 28th May 2020 21:41


Originally Posted by Denti (Post 10795809)
Lufthansa always had a plan B, which is going through the german chapter 11 process (Planinsolvenz in Eigenverwaltung). That would allow them to get the pension pots and there is more than enough money in that pot to weather this storm. An additional bonus would be of course that they could finally get some real concessions from their unions. Will be quite interesting to see that unfold.

Even more interesting is however that france, netherlands and germany are quite willing to give their aviation sectors huge bailouts, while apparently the UK is not. Putting all UK airlines at a distinct disatvantage.

I did read criticism of the Lufthansa board that they had (apparently ) not considered any measures other than the government rescue or insolvency. Perhaps your reply puts flesh on those bones.

I'm not actually sure why the actions of F/NL/D should necessarily disadvantage British airlines. They are all loan schemes AFAIK , and from memory, the proposed interest on the LH loan was 9% by 2030, so certainly not cheap. If the British airlines can either fund themselves ( IAG obviously , EJ probably ) then they don't need the helping governmental hand, which may simply avoid long weeks of negotiation with banks. Government help may well be seen as detrimental by company managements because:
a) There will be pressure not to cut jobs and pay generous redundancy to those who have to leave
b) There may be interference in planning ( number of bases etc ) and re-organisation of working rules for staff.
c) The unions will be much strengthened in their negotiating position.

BEA 71 29th May 2020 06:35

I understand the the biggest hurdle are the Brussels watchdogs, who demand Lufthansa to give up ( valuable ) slots at the hubs at Frankfurt and Munich, which not only the board, but also the unions and the federal state of Hesse strongly oppose.

Denti 29th May 2020 08:31

Well, as Germany and Lufthansa have not even applied for the anti competition case there is no ruling or any decision at all. They suspect there might be something like that, but they do not know. The board simply wants to go the other path, which is a lot more lucrative and would keep the politicians away from the board as well as not diluting the shares. Get rid of the pension pot, there is more than enough money in there, that is what the capital side of the board always wanted.

His dudeness 29th May 2020 11:05


Of course the government do pose strict demands on KLM for this help.
Such as givin up slots for nice folks like Mr.O`Leary to pick from?

Alitalia gets Government bailout after bailout for years and now - in midst of the GOVERNMENT driven shutdown - "we" can´t help LH who was a profitable Airline with quite a lot of high paid jobs who contribute hugely towards social security and taxes in Germany, whilst Mr.O`Leary does largely not (contribute) ? How I envy the Brits for Brexit. The EU is scam, through and through.

the_stranger 29th May 2020 11:53

No, they are not that stupid...

pilot9248 29th May 2020 11:57

&His dudeness, it was in fact the UK who opened the door for Ryanair and enabled it to become what it is today. As to the rest of your rant, that is a discussion for Jet Blast, not this subforum. I would agree with the other posters here that this “rejection” is just part of the political process. I’m sure a sensible solution will be found, it just won’t be as headline-grabbing.

His dudeness 29th May 2020 12:16

Oh, "my rant" is to your majesties dislike ? Read what the not elected Madame Vestager said about the case and maybe then (I doubt it, but..) you´ll understand what I´m saying. Whilst everybody seems to agree that Germany should pay, because we are fiscally a bit more responsible than at least the club med (AND have the highest taxation WORLDWIDE) the same nice persons dislike us being able to do so.


dirk85 29th May 2020 13:35

They are asking to give up what, 6 pairs of slots? Over how many hundreds? Hardly a huge ask in exchange for a 9B bailout...

foxcharliep2 29th May 2020 19:11


Originally Posted by His dudeness (Post 10796643)
Whilst everybody seems to agree that Germany should pay, because we are fiscally a bit more responsible than at least the club med (AND have the highest taxation WORLDWIDE) the same nice persons dislike us being able to do so.

Well said - Cannot agree more with your "rant" that makes complete sense to me being retired LH and a tax payer in Germany.
Nobody in the non-elected EU-cracy has asked how the billions given away to less fiscally responsible countries will be spent or managed or even controlled.
But LH is supposed to give up valuable slots to companies that dodge fair employment contracts, pay little to no taxes in Germany and mostly depend on subsidies to sell cheap tickets.
Makes no sense. Except maybe in Brussels.

Tartiflette Fan 30th May 2020 07:51

Some more information in the following article. The EU initially required the withdrawal of 20 aircraft, LH offered three and there seems to be a basis for agreement on eight, split equally Frankfurt /Munich. That's 24 take-off/landing-slots.

I can't post a link, however this was in today's German Focus magazine.

pilot9248 30th May 2020 12:04

Dudeness and foxcharlie,
following a long discussion with a friend and colleague in Germany I now understand the situation much better and would like to clarify that I am in agreement with both of you regarding your concerns about companies that commit “Sozialdumping” being given a leg up vs. LH who it appears are trying to be socially responsible and also have not announced mass redundancies as have many of their competitors (to my knowledge at least). I simply don’t think it’s helpful to use what I see as clumsy “Stammtisch” language to describe complex issues such as cabotage. I have seen too much damage being caused when valid concerns are being abused to drive political agendas that are not in our (European aviation professionals and taxpayers) interests. However, I also wonder why some member states seem to think they must comply 100 percent of the time with everything the EU says while others seem to be able to creatively adapt and interpret the law as they see fit. Perhaps the German government should have given LH the money and sorted out the business with the EU later as not to prolong the critical situation which LH finds itself in at the moment.

esa-aardvark 30th May 2020 12:36


German government should have given LH the money and sorted out the business with the EU later as not to prolong the critical situation which LH finds itself in at the moment.
Sometimes better to beg forgiveness than ask permission

foxcharliep2 30th May 2020 14:02

theturbofantastic Thank you for your well balanced comment and your understanding of the issue.
I'd only disagree on the term "clumsy Stammtisch language" as it is un-logical decisions like these from the EU that heat up the Stammtisch and provoke resistance to being milked by Brussels while having a socially responsible company punished.

His dudeness 31st May 2020 13:32

...and all the while same person in Brussels (Mrs.Vestager) has apparently no trouble whatsoever in the case of Italia who is direct state subsidies/bailouts since 2008 if memory serves correctly.

There is an additional thing that drives me nuts: "we" will be largely be "responsible" for the biggest money rain the club med in the EU has ever seen. They say its going to be 1750 billion Euros, without ANY conditions against misuse. And 9 for DLH is a serious problem ? AF-KLM gets government money as well. And I´m sure a lot of other airlines will get money from "their" respective governments as well.

I´m utterly convinced, would DLH not be German, things would be handled differently in Brussels. And I´m sick and tired of this ****.

Bidule 31st May 2020 14:54


Originally Posted by His dudeness
... (AND have the highest taxation WORLDWIDE)

According to the OECD, it is far from being correct: https://www1.compareyourcountry.org/tax-revenues-global



Originally Posted by His dudeness (Post 10798354)
... AF-KLM gets government money as well. .

AF had to leave almost all its domestic network to get the money (and this will lead to HOP! disappearing soon)


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