Lufthansa to pay no dividend for 2019 as airline seeks bailoutLufthansa to pay no dividend for 2019 as airline seeks bailout
FILE PHOTO: The spread of the coronavirus disease (COVID-19) in Munich

By Ilona Wissenbach

FRANKFURT (Reuters) – Lufthansa shareholders on Tuesday agreed to not distribute 298 million euros ($323 million) in retained profits as a dividend for 2019, as the airline enters the final stretch of negotiations for a 10 billion euro bailout.

Lufthansa needs to be rescued after coronavirus travel bans forced the German group to ground 700 of its aircraft, leading to a 99% drop in passenger numbers and causing the group to lose about 1 million euros ($1.1 million) in liquidity reserves per hour.

Some 10,000 shareholders followed the meeting online, representing 33.19% of the share capital, Lufthansa said.

The carrier, which is preparing to restart passenger flights slowly from June, is currently in talks with the German, Austrian, Swiss and Belgian authorities about a roughly 10 billion euro bailout. Chief Executive Carsten Spohr said that he expected to clinch a deal with Germany shortly.

“Our focus is on stabilising Lufthansa in its current form and not on acquiring other airlines. We are not planning a takeover at this time,” he said, adding that consolidation among European airlines will slow down due to government bailouts.

Lufthansa’s rescue deal is expected to give Germany a 25.1% stake in the airline as well as supervisory board representation, people close to the matter said.

Separately, Lufthansa is expected to receive about 5 billion euros in non-voting capital as well as roughly 3 billion in state-backed loans, they added.

The exact size of the rescue deal as well as the possible contribution from Switzerland, Austria and Belgium is still unclear, the sources said.

Spohr is expected to visit Brussels this week, according to Belgian daily L’Echo. The airline is seeking 290 million euros in financial aid from the Belgian state. In exchange, Belgium wants guarantees on the future of Brussels Airlines and the development of the Brussels airport.

Spohr said that despite the bailout the German government was not interested in taking an active role in the company, after he had earlier warned about possible state interference.

Klaus Schmidt, head of the council of economic advisers to the federal economy ministry, said at a ministry briefing on Tuesday, that the government should not weigh into discussions, for example, on whether Lufthansa’s Germanwings division should be shuttered.

To reduce its cash outflows, Lufthansa — which is taking a 2020 hit of about 1 billion euros from crude oil hedging — said at the meeting that it had asked Airbus and Boeing to postpone aircraft deliveries.

Lufthansa is sticking to its plan to sell its catering activities, Spohr said, adding that further asset sales were not planned and a potential listing of its Lufthansa Technik business would currently only be possible at a massive discount.

($1 = 0.9224 euros)

(Additional reporting by Arno Schuetze, Marine Strauss, Klaus Lauer, Rene Wagner, Michael Nienaber. Editing by Jane Merriman, Thomas Seythal and Lisa Shumaker)