Billionaire businessman Heinz Hermann Thiele threatened to block the deal, which was agreed with the government late last month, at a virtual meeting on Thursday. But just hours before the vote, Thiele gave way, telling the German newspaper Frankfurter Allgemeine that he would vote for the resolution.
Thiele is the majority shareholder in the Knorr-Bremse group in Germany, a leading global supplier of rail and commercial vehicle braking systems. In an interview with the Frankfurter Allgemeine Sonntagszeitung last week, the billionaire said he was unhappy with the terms of the bailout, which would give the government a 20% stake in Lufthansa and dilute the value of his own participation by 15%.
In response to Thiele’s remarks over the weekend, Spohr said securing the two-thirds majority needed to approve the bailout “seems uncertain.” If shareholders reject the plan, the airline has made “extensive preparations” to avoid grounding its aircraft and will “discuss options” with the government before filing for insolvency, Spohr said in a letter to officials.
Time is up. Lufthansa lost 1.2 billion euros ($ 1.3 billion) in the first quarter and said last month it had reached 1 million euros ($ 1.1 million) in cash every hour. It had 4 billion euros ($ 4.5 billion) in cash on May 5th.
“The logical decision under the circumstances would be for shareholders to accept the agreement on the table,” said Per-Ola Hellgren, an investment analyst and director of the German bank Landesbank Baden-Württemberg.
The vote against the agreement would mean “taking a big risk” and could force Lufthansa to go through a process of insolvency, he added. On the other hand, due to the urgent situation, the German government could grant and agreed to change the terms of the agreement to suit the shareholders, Hellgren told CNN Business.
The world air force is not expected to recover from the pandemic for several years. Lufthansa, which owns airlines in Germany, Switzerland, Austria and Belgium, is planning an extensive restructuring program that will reduce its fleet by 13% and could lead to 22,000 job cuts.
The rescue of Germany will give the government the right to appoint two members of the company’s supervisory board, which analysts say could hinder restructuring efforts.
Lufthansa risks being less competitive and less able to attract investment in the future if restructuring plans are delayed, said Neil Glynn, head of European transport research at Credit Suisse.