Lufthansa Warns of Urgent Need for Bailout as Talks Drag On

Deutsche Lufthansa AG’s management said the need for a multibillion-euro coronavirus bailout was becoming “urgent” as talks with the government in Berlin drag on.

In a letter to employees, the airline said cash reserves continued to shrink while it negotiates the 9 billion-euro ($9.9 billion) rescue package. Lufthansa’s board said it hoped the government would find the “political will” for a deal that would keep the carrier competitive against international airlines and meet with European Union approval.

“The question of when and in what structure the German government decides to support Lufthansa is becoming more and more urgent for us,” the company’s management board said in the letter seen by Bloomberg.

The shares fell 1.8% to 7.88 euros in early trading in Frankfurt, having halved in value since the start of the year.

Lufthansa is running out of time and money, burning through 800 million euros each month after the coronavirus grounded most of its fleet. Chief Executive Officer Carsten Spohr said on May 5 that the company had about 4 billion euros in cash remaining.

300 Planes

The letter gave further details of Lufthansa’s expected fleet reductions for the coming years. The board said it expected 300 of its aircraft would remain grounded in 2021 as demand for flying recovers only slowly, with 200 remaining out of service into 2022.

Lufthansa had previously said it expected its pre-crisis fleet of around 760 aircraft to be around 100 smaller once normality returns around 2023, a forecast it stuck to in the letter.

Reuters first reported on the letter.