Frankfurt, Berlin The federal government’s Lufthansa share package, which is up for sale, arouses the interest of potential buyers. According to financial circles, the first investors have made inquiries with the federal government. This includes sovereign wealth funds. Neither Lufthansa nor the Federal Ministry of Finance wanted to comment on the information when asked. There is “so far no decision on the timetable and price expectations,” according to government circles.
With the exit of the state, Lufthansa would regain full independence. This is also important with a view to a Lufthansa management plan: joining the Italian company ITA, the successor company to Alitalia. According to information from financial and corporate circles, Lufthansa has been in close contact with those responsible in Italy for weeks. ITA and Lufthansa did not want to comment.
The Lufthansa leadership has been allowed to buy back since the state aid was repaid last November. But as long as the federal government is a large shareholder, it must agree to acquisitions. The representatives of the federal government would probably do the same in the ITA case, according to financial circles. So far, however, the management has not yet made representations to the federal government.
Lufthansa has long had an interest in the Italian market. Especially the long-distance business in Rome is exciting for the group, including the feeder and distribution traffic, some of which could be routed via Germany. Lufthansa has therefore been active in the Italian market for years with the Air Dolomiti brand.
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The German group has been traded several times in recent years as an investor in the permanently insolvent Alitalia. But both sides – the Italian state as the owner and Lufthansa – had very different ideas about the necessary restructuring.
ITA would fit well into the Lufthansa group
With ITA, a significantly leaner successor company has been at the start since October last year. This only took over every fourth employee from Alitalia, there are no financial legacy issues. With a planned fleet of 59 Airbus aircraft, the new airline would fit well into the Lufthansa group.
A few weeks ago, ITA President Alfredo Altavilla expressly mentioned Lufthansa as the preferred candidate in an interview with the Handelsblatt. With takeovers like that of Swiss, the management of Lufthansa has proven that it leaves the national identity to the airlines – an important factor for politics.
However, the Lufthansa rival IAG (British Airways and Iberia) had recently cast an eye on the Italian provider. Air France-KLM recently agreed with ITA to coordinate flight schedules and distribution, a so-called codesharing agreement. In contrast, the US airline Delta said goodbye to the words of CEO Ed Bastian from the race for ITA.
In recent years, Lufthansa has been traded as an investor in the permanently insolvent predecessor company Alitalia several times.
(Photo: imago images/ZUMA Wire)
According to financial and corporate circles, there are still a few unanswered questions. ITA wants equity, there is talk of 15 to 40 percent, which Lufthansa should take over in ITA. The Lufthansa leadership, in turn, wants to limit the financial risk as much as possible, also with a view to their own high level of debt. In addition, a construction must be found in which the state largely stays out of ITA, according to the Lufthansa supervisory board.
The prospect of joining ITA could in turn fuel the planned sale of the Lufthansa package by the federal government. As can be heard from financial circles, those responsible in Berlin are already demanding a premium on the current price. This is also justified by the fact that air traffic should have recovered significantly in the summer and with it probably the share price of the airline. “Anyone who wants a surcharge earlier must take this into account,” says financial circles.
The federal government currently holds around 14 percent of the Lufthansa shares through the Economic Stabilization Fund (WSF). The state initially got involved in mid-2020 with 20 percent. After a capital increase of a good two billion euros in October 2021, this package was reduced to 14.09 percent.
In principle, the papers could be issued from April or May; this is what has been agreed between Lufthansa and the WSF. In any case, the federal government must have withdrawn by October next year at the latest.
The WSF has several options: According to the framework agreement, it can place its shares widely, but it can also sell larger packages to “qualified investors”. Selling individual packages or even a complete package would have certain advantages. The federal government could achieve a package price, for example.
The federal government is in for a big profit
One thing is already clear: the Lufthansa rescue will be good business for the federal government and ultimately for the taxpayer. The WSF entered the market in 2020 for EUR 2.56 per share. The federal government paid around 300 million euros for the 20 percent. Based on the current share price, the remaining 14.09 percent package is worth a good 1.1 billion euros.
Lufthansa would get a new anchor shareholder in a package sale. CEO Carsten Spohr has repeatedly expressed sympathy for a large individual shareholder in the past. Shortly before the corona pandemic, the successful Munich entrepreneur Heinz Hermann Thiele surprisingly slipped into this role. In the meantime, he owned a good 15 percent of the airline group and in the summer of 2020 he even briefly threatened to veto the rescue and the entry of the state.
After Thiele’s death last February, however, the heirs sold almost all of the shares and their shareholdings slipped below the reporting limit of three percent. With the exit of the federal government, Lufthansa would also lose the second major shareholder.
The company has so-called restricted registered shares whose owners have to identify themselves. The reason: Lufthansa must be majority owned by German and European shareholders, otherwise there is a risk of losing the corresponding traffic rights. A long-term committed anchor shareholder also provides additional security here.
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