Lufthansa returns to bond market as travel bookings pick up

Deutsche Lufthansa AG is back in the bond market for the fourth time in a year, just a week after posting an unexpected return to profit, as the travel industry recovers. 

Europe’s largest carrier is offering 1.5 billion euros ($1.7 billion) of notes as it capitalizes on the momentum provided by its first profit since the start of the pandemic, helped by a pickup in bookings and booming cargo demand. 

Germany’s flagship airline, together with peers such as British Airways, Air France-KLM, United Airlines and Virgin Atlantic Airways Ltd. is set to benefit from the recent reopening of the U.S. to visitors from Europe. A tourism rebound has also placed the bonds of budget competitors such as Wizz Air Holdings Plc and EasyJet Plc among the best-performing newly-minted deals this year. 

Lufthansa is talking to investors to raise the bonds in two tranches. One is for 600 million euros with a 2-year maturity said to yield 1.625%. The other is a 900 million euros note with a 5.5-year maturity and 3% yield, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it. The deal was upsized and expected price tightened from initial guidance following strong investor demand. 

A company spokesman wasn’t available for comment.  

The company will use the proceeds for general corporate purposes and to refinance existing debt. Since November last year, Lufthansa has visited the bond market four times, raising funds in February to repay a loan provided by the Germany’s state development lender KfW to weather the pandemic.

In October, Lufthansa raised equity to repay funds provided by the German government to stave off insolvency last year.