Lufthansa wins investor approval for $6.6b capital raise

Lufthansa shareholders approved a potential capital raise of E5.5b, a move management said is needed to repair the stricken carrier’s balance sheet. At the German airline’s annual meeting on Tuesday, a majority of investors gave permission for the issuance of 2.15b new shares at a time of the carrier’s choosing. The nominal price of the stock would be E2.56 each, about one-fourth Lufthansa’s current share price, though the airline is likely to issue them at a higher amount. The company said last week it wouldn’t use the full amount available, and instead aim for the “smallest possible” raise. “The resolution is intended to enable us to increase our capital flexibly so that we can strengthen our balance sheet ratios again and return to our former financial stability,” CEO Carsten Spohr said in a speech to shareholders, urging them to back the proposal. The move would give Europe’s largest airline enough cash to replace Germany’s so-called silent participation, a major part of Lufthansa’s E9b government bailout. The interest rates on the instrument -- a debt-equity hybrid that doesn’t dilute shareholder voting rights -- are set to rise over coming years. A simple majority was required for the motion to pass. The airline said it hasn’t decided when to undertake the capital raise, but could do so this year if market conditions allow. Last week, Lufthansa became the latest carrier to lower its expectations for summer travel, saying a significant market recovery won’t come until the second half as inoculation programs progress. It estimates full-year capacity at around 40% of pre-crisis levels.<br/>