Lufthansa will ask Germany, Switzerland, Belgium, and Austria for a bailout as it seeks to stabilize itself and its subsidiary carriers in a time of uncertainty.
Speaking to staff, Lufthansa CEO Carsten Spohr said:
“I am optimistic that the talks in Bern, Berlin, Brussels and Vienna will lead to good and positive results.”
Up until now, Lufthansa has only explored state aid. This is the first public acknowledgement it is actively seeking it and not just for Lufthansa, but for Austrian Airlines, Brussels Airlines, Eurowings, and SWISS.
Lufthansa, which has grounded 95% of its fleet, has been in talks with Germany for billions of dollars in state aid. Germany appears open to the idea, but according to Reuters may take an equity stake in the airline. Lufthansa refuses to discuss the specifics of that discussion, however a spokesperson said:
“We are in close contact with the federal government to secure our liquidity.”
Spohr echoed the recent sentiment of the Lufthansa Board that demand will recover much more slowly than originally hoped for.
“This crisis will take much longer than we could have imagined just a few weeks ago.”
Spohr also added that Lufthansa has a “buffer” of four billion Euros in cash, but is burning it at a rate of one million Euros per hour. That liquid cash, however, is legally owed to consumers for cancelled tickets (not that Lufthansa will follow the law when Germany turns a blind eye).
Lufthansa will seek state aid from four nations as it seeks to stabilize its cash flow in light of unprecedented negative revenue from depressed future bookings and refund obligations from cancellations. When the dust settles, Austria, Belgium, Germany, and Switzerland could all be part owners of the Lufthansa Group if equity ends up being part of the deal.