German Government Will Get 20 Percent of Lufthansa in What Could Be Biggest Corporate Bailout Yet

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Lufthansa is expected to be getting a $9 billion+ corporate bailout that is considered to be the biggest corporate bailout to take place since COVID-19 began. It is regarded as the largest airline rescue package deal to date.

The multi-billion rescue deal is going to give the German government a 20 percent stake in the company, with potential for even more down the road.

The government allegedly intends to sell that stake in the company at some point in the future, potentially by 2023. However, the deal still has not been approved by Lufthansa shareholders or the European Commission.

The plan is that the government allegedly won't be selling their stake until the 'company is fit again' but who know what that might look like to them or how long that might take.

This deal is the result of negotiations between the company and the state.

By moving to bailout these companies the government only works to skew the market and prop up what would have otherwise turned into failures. When the government has only promised 100+ billion in overall bailout funds as they have, for struggling companies from the crisis, this is just one company that is taking a significant portion of that when there are thousands of others out there that likely think they are just as qualified for that attention and help.

Right now travel has reduced more than 90 percent around the world. With Lufthansa, they say that they have been losing about €1 million an hour and are only operating with around 1 percent of the capacity that they are used to seeing. No company can weather this sort of storm for long, there are many who are struggling just the same.

Smaller competitors in the market have criticized Lufthansa for attempting to secure the $9 billion bailout.

“They’re just hoovering up state aid to give them unlimited firepower to distort the competition market once we’re all back flying again,” - Ryanair boss M. O’Leary

Market Distortion Via Government

“All these airlines have been poorly managed and poorly run and now they can turn to their governments to get bailed out and it is certainly distorting the market,” - J. Váradi, Wizz Air’s CEO

Pics:
pixabay
pic2 Irish Times



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2 comments
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Bailout share takeovers and corporate profits have been pretty stunning so far amidst this health crisis and these steps toward recovery, and it is still fairly early in the recovery part, it appears.

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This gov should be chased to hell!

It's pure heteronomy!

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