Lufthansa Gets $9.8 Billion Stabilization Package from German Government

Lufthansa will give the German government a 20 percent stake in the group and two seats on its supervisory board as part of the terms of a $9.8 billion bailout.

The group owns airlines in Germany, Austria, Switzerland, and Belgium.

The government's "stabilization package" includes injecting $6.2 billion into the airline, which will earn it a return that starts at 4 percent this year and next before increasing. It also consists of a three-year credit facility of up to $3.3 billion.

Also, the government will get the 20 percent stake in Lufthansa for $2.79 per share, totaling $327 million.

The government also has the option to raise its stake to 25 percent plus one share that would enable it to block any potential takeover.

Part of the agreement is for the government to entirely sell its shares by the end of 2023, after full repayment of its $6.2 billion investment and with a share price valuation over the purchase price.

Lufthansa may also be required to waive future dividend payments.

The airline group posted a $1.3 billion first-quarter loss and did not expect global aviation to recover for several years. It is shutting down its discount carrier Germanwings and plans to cut 10,000 jobs.