German flag-carrier Lufthansa has managed to pay back the final instalment of a 9 billion Euro taxpayer-funded government bailout years ahead of schedule as travel restrictions were eased over the summer and passengers came flooding back.
In recent weeks, the airline reported that bookings had returned to 80 per cent of pre-pandemic levels on the back of the reopening of the United States to travellers from Europe. In the third quarter, Lufthansa reported a modest profit, although the carrier is still likely to make a significant annual loss.
At the height of the pandemic and with Germany and much of the rest of the world plunged into lockdown, Lufthansa negotiated a €9 billion government rescue package through the state-owned Economic Stabilization Fund (WSF).
In return, the WSF snatched a 20 per cent stake in the airline, although Lufthansa was always keen to payoff off the debt as quickly as possible in order to avoid government interference in its business through its newly acquired joint ownership of the airline.
The bailout package was only approved after fraught discussions over anti-trust conditions proposed by the European Union. Lufthansa was forced to give up just 24 take-off and landing slots to one competitor each at both Frankfurt and Munich.
The conditions were a lot less than those originally proposed by the EU and the slots only have to be handed over for a year and a half.
On Friday, Lufthansa announced that it had paid the final €1 billion of the bailout which also removed the German government’s silent partnership in the airline.
“I would like to thank the German federal government and the German taxpayers. In the most serious financial crisis in our company history, they have given us a future perspective,” Lufthansa chief executive Carsten Spohr commented on Friday.
“We are proud that we have now been able to fulfil our promise earlier than expected and repaid the German financial aid. I thank our employees for their great commitment and especially our customers who have remained loyal to us in this challenging time.”
Remco Steenbergen, Lufthansa’s chief financial officer thanked investors for stumping the cash to allow the airline to repay its loans so quickly and promised to “create sustainable value for our shareholders.”
