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Government of Germany have finally agreed to bailout Lufthansa.
With the basic rescue package worth €9bn, Government of Germany will own 20% stake in the company.
The rescue package which is subject to EU and shareholders approval, will include €3bn in loans via KfW, the country’s state-owned development bank, and will preclude the airline from paying dividends and constrain executive pay.
The government agreed to buy 20% stake of Lufthansa at a share value of €2.56 per share.
The Government’s shareholding will not take part in voting and plans to sell the shares in 2023.
A further €5.7bn funding in the form of equity capital can be paid down by Lufthansa in whole or in part on a quarterly basis to take back full control of the Airline by 2027.
Lufthansa group has been burning €1 million per hour after COVID-19 which slid the passenger traffic to just 1 percent of their usual capacity.