Lufthansa bailout hinges on refunds for cancelled tickets

The size of the German government bailout for Lufthansa depends on whether or not the airline will be forced to pay billions of euros in refunds to customers. Lufthansa had about E4b in unused ticket money at the end of December, according to the company’s annual report. If the EU enforces rules that the company has to issue refunds to passengers who demand them, that would wipe out much of the airline’s remaining liquidity, increasing the size of the government’s intervention. Analysts at Credit Suisse on March 23 estimated that Lufthansa has about E5.1b in cash and undrawn credit facilities, a sum that would run out in about 25 days if the company had to refund all its tickets. The government, faced with potentially hundreds of billions of euros in bailouts and assistance to virus-hit companies, on Thursday asked the EC that airlines like Lufthansa be able to issue vouchers. Brussels officials have so far insisted that existing rules be upheld and airlines forced to refund customers that don’t want vouchers for rebooking. Forced refunds “threaten to bankrupt companies,” Germany’s government wrote in an appeal to the EC. A spokesman for the commission said the body was looking into the request, but wouldn’t say when any amendments might be made.<br/>