Lufthansa stabilization packages

Deutsche Lufthansa AG agreed stabilization measures with the Economic Stabilization Fund (ESF) of the Federal Republic of Germany and the governments in Belgium, Austria and Switzerland in June 2020 to mitigate the consequences of the corona pandemic and maintain the solvency of the company.

The negotiated stabilization package included stabilization measures and loans of up to EUR 9 billion.

The ESF has agreed to make silent participations of up to 5.5 billion euros in total in the assets of Deutsche Lufthansa AG. The profit participation of the ESF is calculated as a coupon with an ascending interest rate, starting at 4% in 2020 and 2021.

 EUR 4.5 billion of the silent participations are classified as equity in accordance with the provisions of the German Commercial Code (HGB) and IFRS (Silent Participation I). In this amount, the silent participation is unlimited in time. The funds of Silent Participation I must be drawn by December 31, 2021. The Company  can  terminate the Silent Participation I  in whole or in part.

Furthermore, the ESF subscribed to shares by way of a capital increase in order to build up a 20% stake in the share capital of Deutsche Lufthansa AG. The ESF may increase its stake to 25% plus one share in the event of a takeover of the company.

The Silent Participation II in the amount of EUR 1.0 billion is recognized as debt. In the event of non-payment of the coupons on the Silent Participations by the company it can be converted into a further shareholding of 5% of the share capital at the earliest from 2024 and 2026 respectively.

The stabilization measures were supplemented by a syndicated credit facility from the KfW of EUR 1 billion with a term of three years. The company already repaid the facility early in February 2021. The funds for this were raised with a bond issue on the capital market.

In Switzerland, Austria and Belgium, state guarantees for loans amounting to EUR 2 billion were also provided as part of the stabilization program. Stabilization measures of a further EUR 0.2 billion relate to non-refundable grants and profit participations in Austria and Belgium.

The conditions relate, among other things, to the waiver of future dividend payments, restrictions on the acquisition of shareholdings in other companies and restrictions on management remuneration. In addition, Angela Titzrath and Dr. Michael Kerkloh were appointed to the Supervisory Board  in agreement with the German government, one of whom (Dr. Michael Kerkloh) is a member of the Audit Committee. Except in the event of a takeover, the ESF undertakes not to exercise its voting rights at the Annual General Meeting in connection with the usual resolutions of ordinary Annual General Meetings. After approval by the Executive Board and the Supervisory Board, the shareholders of the company voted in favor of accepting the capital measures and the participation of the Economic Stabilisation Fund of the Federal Republic of Germany in Deutsche Lufthansa AG at an Extraordinary General Meeting on 25 June 2020. The stabilization package was approved by the European Commission.

Details of the stabilization measures can be found in the ESF Framework Agreement and the Investor Presentation. In its declaration, the Executive Board of Deutsche Lufthansa AG undertakes to comply with the agreed terms and conditions.

In connection with the repayment of the stabilization measures, the 2021 Annual General Meeting resolved to create a new Authorised Capital C in accordance with §7b WStBG (Economic Stabilization Acceleration Act) in the amount of up to EUR 5.5 billion with a term of five years. The amount of the Authorised Capital C is derived purely technically from the maximum amount of the ESF Silent Participations I and II. The majority of the proceeds from a possible capital increase under Authorised Capital C would have to be used to repay the stabilization measures. Further information on the Authorised Capital C can be found here.

Documents referring to the Stabilization Package

For details of the stabilization package funds currently drawn down, please refer to the current Company Presentation, which can be downloaded from the homepage of the Investor Relations website.