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. 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 Stabilization Fund of the Federal Republic of Germany in Deutsche Lufthansa AG at an Extraordinary General Meeting on 25 June 2020. The stabilization package was also approved by the European Commission.

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

EUR 4.5 billion of the silent participations were classified as equity in accordance with the provisions of the German Commercial Code (HGB) and IFRS (Silent Participation I). An additional EUR 1.0 billion were recognized as debt (Silent Participation II).

With the completion of the capital increase, which was executed under Authorised Capital C resolved by the Annual General Meeting 2021 and closed on October 11, 2021, Deutsche Lufthansa AG has fully repaid the drawn amount of the ESF Silent Participation I in the amount of EUR 1.5 billion. The Silent Participation II of EUR 1.0 billion was repaid in full and the undrawn remaining part of Silent Participation I of around EUR 3 billion was terminated in November 2021, following further progress in the operational recovery and successful debt financing measures in the public market.

The stabilization measures were originally supplemented by a syndicated credit facility from the KfW of EUR 1.0 billion with a term of three years. The company had already repaid the facility early in February 2021.

Through its notification of voting rights of 14 September 2022, the Republic of Germany notified Deutsche Lufthansa AG that on 13 September 2022 the remaining interest of the Economic Stabilization Fund in the shares of Deutsche Lufthansa AG had been sold in full. This brings all the remaining restrictions under the stabilization measures to an end. After the stabilization measures had been ended, Deutsche Lufthansa AG paid the outstanding interest on the 2015 hybrid bond on 10 October 2022.

As part of the stabilization measures, 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.

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.

Swiss International Air Lines (SWISS) terminated its bank loan facility of which 85% were guaranteed by the Swiss Confederation at the end of May 2022, significantly ahead of its originally agreed repayment date in 2025. With the pandemic situation now more stable and with the eased travel restrictions prompting positive trends in the company’s liquidity, SWISS is now able to meet its financing needs on the capital markets via the Lufthansa Group. Since the establishment of the facility, SWISS has never drawn down more than half of the total loan amount available and paid a total of CHF 60 million in interest and fees during the loan facility period.

Due to the strong increase in demand, a good liquidity development and the financial support of the Lufthansa Group, both Austrian Airlines and Brussels Airlines will repay the remaining government stabilization measures early by the end of the year 2022. In Austria, Austrian Airlines will repay the remaining EUR 210 million of the total loan, and in Belgium, Brussels Airlines will repay EUR 290 million. This means that all stabilization measures will end prematurely at the end of 2022.

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