German government offers Lufthansa $10 billion bailout

Germany  said it planned to sell its shares by the end of 2023.

The deal, which is designed to preserve thousands of jobs, still requires approval by Lufthansa shareholders and the European Commission.

Lufthansa has been negotiating for weeks with the government on an emergency aid package. Meanwhile, it has taken drastic self-help measures such as slashing about 95% of its schedule, encouraging workers to take unpaid leave and accept fewer hours, cutting training, decommissioning aircraft, terminating aircraft operating leases with third-party carriers, and halting other discretionary expenses. It also is converting passenger planes for dedicated cargo operations to earn revenue.

The German aid represents the largest rescue for any airline so far. The U.S. government has approved $25 billion in direct grants for domestic passenger carriers to prevent involuntary furloughs through September, with another $25 billion in loans also available. American Airlines is the largest recipient of U.S. aid at $5.8 billion, followed by Delta Air Lines at $5.4 billion.

The International Air Transport Association has estimated airlines are on track for revenue to be $314 billion lower than budgeted this year. It has urged governments to provide cash infusions, loans and tax relief for the industry, saying it is a foundational part of the global economy and will be essential to restarting economic activity once the pandemic calms down.

Some airlines are already in trouble. Virgin Australia and Latin American carrier Avianca recently filed for bankruptcy protection, El Al warns it could fold without a bailout from Israel’s government, and U.K. regional carrier Flybe has ceased operations.