German airline Lufthansa has informed that it might need protection from creditors if the shareholders of the company don’t approve the German-government backed bailout plan on the voting to be held on June 25. Lufthansa was among the first major European airlines to announce that the impact of COVID-19 pandemic on its finances would be difficult to manage. The airline announced initial jobs cuts and has indicated further job cuts even after the German government approved bailout package for the airline.
In an interview with a Frankfurt-based newspaper, German billionaire Heinz Hermann Thiele criticized the deal agreed by Lufthansa Group. Thiele is the biggest shareholder in Lufthansa Group and he said that the airline should have explored other options. Lufthansa is offering 20 percent stake to the German government and two seats on its board for Euro 9 billion bailout. Thiele added that he has raised his stake in Lufthansa to 15.5 percent.
Airlines are facing uncertain future and many airlines have announced massive job cuts. Aviation unions have also agreed to job cuts with the management in order to save jobs. Thousands of jobs in all the segments of aviation are at risk and airlines in many countries have been exploring options to stay in business.
In an official statement, Lufthansa Group said that it might possibly have to apply for protective shield proceedings under insolvency law a few days after the meeting if no other solution is found immediately.
German Finance Minister Olaf Scholz has urged Lufthansa shareholders to approve the deal. The risk of deal failing in shareholders vote is very low but Lufthansa management has warned about the possible risks in case the deal doesn’t win approval on June 25.