Germany may take part in Lufthansa capital increase

Germany is considering participating in a planned E3b capital increase at Lufthansa, Finance Minister Olaf Scholz said Wednesday, a move that could help to repay the airline’s state-backed bailout. Reuters last month reported that Lufthansa was working with Deutsche Bank and Bank of America on plans for a capital increase in either the summer or autumn. “We are always taking a close look at this. One thing is clear: if companies have a goal of freeing themselves of a need for state support, we will make that possible,” said Scholz. “Our support was put in place so that companies could survive the crisis and then stand on their own feet again,” he said. The bulk of a government-backed E9b bailout for the German carrier, hit hard by the coronavirus crisis, consists of a so-called silent participation of E5.5b which Lufthansa intends to repay in part with proceeds from the capital increase. The participation of the German government could send a positive signal to markets and help ensure the refinancing is successful and also limit a dilution of the government’s 20% stake. However, it could also prompt state aid questions from the EC, say people in the sector.<br/>