Lufthansa pitches $6.5b plan to raise capital, repay aid

Lufthansa will ask shareholders to approve a capital increase that would open a path toward removing the German government as its biggest shareholder. The proposed E5.5b in fresh capital would give Europe’s largest airline enough cash to replace a so-called silent participation, a major part of Lufthansa’s E9b bailout from the state. Interest rates on the silent participation are due to rise, and the airline might be able to get better financing via a capital raise, the company said in slides accompanying the announcement Thursday. Lufthansa could decide to raise less than the full authorization, and could issue fresh capital in steps. While Lufthansa’s statement outlines it would only opportunistically issue fresh capital, “it still illustrates the equity dilution risk that keeps us cautious on shares,” said Adrian Yanoshik, an analyst at Berenberg Equity Research. Lufthansa received the bailout last year after the coronavirus pandemic punctured a decades-long boom in flying. The package saw the German government take a 20% stake and apply strict restrictions on the airline’s M&A activity and executive pay.<br/>