Along with several other airlines around the world, Lufthansa, the German flag carrier is also in dire need of funds to survive post the pandemic. CEO Carsten Spohr had announced that the Lufthansa Group has burnt €1 Million per hour so far since the crisis began.
Answering calls from the airline, the German Government has agreed to aid the airline with a rescue package of around €9 Billion that has a few strings attached. The conditions are that the money injected by the government will be in the form of a loan and a capital release, the money will accrue a 9 percent interest annually, and the Federal Government of Germany will also hold two supervisory positions in the board. The German Government will also become a shareholder in the airline. The Group, however, is not in favor of this deal and prefers the Federal Government to be a silent partner.
After talks with the board, however, the German news site Frankfurter Allgemeine recently reported that Lufthansa will reject the deal made by the German Government and will instead look into insolvency like a protective shield. Under this shield, the airline will be under administration and reorganized under the previous management. This move is similar to what Condor did.
In other news, Lufthansa Group, which consists of Lufthansa, Swiss, Austrian, and Brussels Airlines, is looking for funds for the other subsidiaries too. The group is said to be looking for a €290 Million funding from the Belgian Government for their Brussels Airlines.
Lufthansa is bracing itself for a bumpy ride as the future for the Group looks uncertain but plans to reach normalcy at least by 2023. The airline says that the fleet size will shrink from 700 aircraft to 600, and their recovery is likely to complicate a price war. One can only hope airlines will weather this storm and come out undefeated.