Lufthansa Group is seeking state aid to survive

Europe’s largest airline warned late Thursday that it’s running low on cash and won’t be able to survive without state aid from Germany, Switzerland, Austria and Belgium. Each of those countries contributed former national carriers to the sprawling airline group, and negotiations are ongoing for an aid package that could total 10 billion euros ($10.8 billion), according to people familiar with the matter, Bloomberg reported.

Lufthansa, which is burning through €1m an hour, said it was flying just 1 per cent of its usual passenger numbers. On Thursday, the group warned that it was only weeks away from running out of cash. Despite emphasising last month that it would be able to borrow against a fleet worth about €10bn, Lufthansa said it could no longer raise money to pay for liabilities such as ticket refunds on the capital markets. “This leaves government help as the last remaining hope for Lufthansa to remain solvent,” said Daniel Roeska, an airline analyst at Bernstein. The company has already announced several cost-saving measures, including plans to axe its Cologne-based Germanwings brand, and shrink its Eurowings division. Lufthansa has also been operating without a chief financial officer since the start of the month, after Ulrik Svensson resigned on medical advice, According to The Financial Times.

German airline Lufthansa is seeking a loan of 290 million euros ($313.08 million) loan from the Belgian government to avoid the bankruptcy of its Belgian subsidiary Brussels Airlines, Belgian broadcaster LN24 said on Friday. Belgian Minister of Finance Alexandre De Croo is leading talks with the German carrier, as reported by Reuters.

Lufthansa Group is not alone in being dependent on government assistance. Airlines of the United States have been supported through the CARES Act. This will provide $29 billion in loans and loan guarantees for air carriers as well as $32 billion in payroll protection grants for air carriers and their contractors. The current situation highlights the role of governments in ensuring the survival of crucial businesses during unforeseen circumstances and catastrophes, Simple Flying wrote.

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