Lufthansa soars after top shareholder backs bailout

Billionaire Heinz Hermann Thiele’s backing for the Lufthansa deal will come as a relief for Chancellor Angela Merkel, who can ill afford another business collapse. (AFP)
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Updated 26 June 2020

Lufthansa soars after top shareholder backs bailout

  • Flagship airline wins 11th-hour reprieve with government set to take 20% stake

FRANKFURT, Germany: Lufthansa shares jumped around 15 percent on Thursday after its top shareholder dropped his objections to a €9 billion ($10 billion) government bailout for the German airline brought to the brink of collapse by the pandemic.

“I will vote for the proposal,” billionaire investor Heinz Hermann Thiele, who recently increased his stake in Lufthansa to 15.5 percent, told the Frankfurter Allgemeine daily on Wednesday.

His endorsement amounts to an 11th-hour reprieve for Germany’s flagship airline after fears had swirled he might veto the proposed rescue, which will see the government take a 20 percent stake and board seats, diluting existing shareholdings.

Shareholders are due to vote on the plan later on Thursday at a meeting held online due to the pandemic. Thiele has a virtual veto, as only 38 percent of shareholders have registered to vote.

Thiele’s backing will come as a relief to Chancellor Angela Merkel, who could ill afford another high-profile business collapse following the failure of payments firm Wirecard.

Lufthansa, which traces its roots back almost a century, employs around 138,000 people and owns brands, including Eurowings and Austrian Airlines.

It has been brought to its knees by COVID-19 and what promises to be a protracted travel slump, and like many rivals across the world, sought state help to stay afloat. Even after Thursday’s gains, its shares are down almost 40 percent this year.

Also on Thursday, European Union regulators approved Lufthansa’s €6 billion recapitalization, part of the bailout deal, subject to a ban on dividends, share buybacks and some acquisitions until state support is repaid.

Concerned a government stake would make it harder for Lufthansa to make tough decisions about restructuring and job cuts, Thiele had instead proposed an indirect government holding in the airline via Germany’s KfW development bank.

That sparked fears the bailout would fail and Lufthansa would have to seek protection from creditors within days.

Thiele said that talks with the government on Monday had not removed his doubts: “Differences remain with government representatives,” he told the newspaper.

HIGHLIGHTS

  • Billionaire Thiele drops objections to bailout.
  • Shareholders to vote on rescue plan at EGM.
  • Plan to see state take 20% stake in Lufthansa.
  • Cost-cutting deal struck with cabin crew union.

But he said he could not have voted for insolvency, even though his investment would continue to be at risk. He said he would continue to seek to influence the company’s development in the future, although declining to say how.

Thiele said it was in the interests of Lufthansa employees that management quickly negotiate restructuring with unions.

Up to 22,000 jobs could be at risk at the airline.

Lufthansa struck a deal overnight with the UFO union representing German cabin crew that is set to reap more than €500 million in savings, including steps to stop pay rises, cut working hours, and a cap on pension contributions.

Lufthansa said on Tuesday it had not yet reached a deal with services union Verdi. More talks are scheduled.


Scammers fool Britons with investment firm clones, says trade body

Updated 28 November 2020

Scammers fool Britons with investment firm clones, says trade body

  • Losses amounted to 9.4 million pounds ($12.56 million) between March and mid-October

LONDON: More than 200 British retail investors have lost nearly 10 million pounds ($13.4 million) in total to sophisticated investment scams since a government lockdown in March to fight the COVID-19 pandemic, a trade body said on Saturday.
Fraudsters cloned genuine investment management firms’ websites and documentation, and advertised fake products on sham price comparison websites and on social media, the Investment Association said.
Greater financial uncertainty and more time spent online have likely contributed to the increase in scams, industry sources say.
Losses amounted to 9.4 million pounds ($12.56 million) between March and mid-October, the IA said, based on information it got from member firms which had been cloned.
“In a year clouded in uncertainty, organized criminals have sought opportunity in misfortune by attempting to con investors out of their hard-earned savings,” Chris Cummings, chief executive of the Investment Association said.
The investment management industry was working closely with police and regulators to stop the scams, he added.
Britain’s Action Fraud warned earlier this month that total reported losses from all types of investment fraud came to 657 million pounds between September 2019 and September 2020, a rise of 28% from a year ago. Reports spiked between May and September, following Britain’s first national lockdown, the national fraud and cybercrime reporting center added.