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.

Following the repayment of Silent Participations, the ESF has undertaken to sell its remaining 14.1% shareholding in Deutsche Lufthansa AG by October 2023 at the latest, following the expiry of a six months lockup in April 2022.

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.

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 company reports regularly on the use of the agreed measures in its financial reports.

The conditions associated with the stabilization package related to the waiver of dividend payments, the ban on cross-subsidization of Group companies, approval requirements for significant transactions and the suspension of variable compensation payments to Executives will remain in force until the ESF has fully sold its share package. Increases in the base salaries of Executive Board members and the acquisition of shareholdings in other companies are possible again since the silent participations have been repaid.

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. 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.

Documents referring to the Stabilization Package

For details of the stabilization package funds currently drawn down, please refer to the latest financial reports, which can be downloaded from the Investor Relations website.

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