Lufthansa will lose its spot on Frankfurt’s benchmark stock index DAX after the coronavirus pandemic caused the airline’s share price to plummet, the stock market announced late Thursday.
The German airline giant will be demoted to the MDax index on June 22, Deutsche Boerse said in a statement.
Lufthansa has held a spot in the index of Germany’s 30 biggest listed companies since the index was set up in 1988.
Its spot will be taken by real estate company Deutsches Wohnen, which owns around 160,000 apartments and its Germany’s second-largest property company.
Read more: Lufthansa accepts terms of EU-Germany rescue deal
Major losses for Lufthansa
Lufthansa’s share price was already falling well before the pandemic, but lockdowns and global freezes on passenger travel have hit the company especially hard.
On Wednesday, the company said it would undergo “far reaching” restructuring after posting a first quarter net loss of €2.1 billion.
The German government and Lufthansa agreed to a €9 billion ($10.2 billion) bailout package earlier this week.
Under the deal, the German government will take a 20% stake in Lufthansa, making it the group’s biggest shareholder. Shareholders will be asked to back the deal during an online meeting on June 25.
rs/aw (AFP, dpa)
Germany is throwing Lufthansa a €9 billion ($9.6 billion) lifeline. The government bailout will give the state a 20% stake in the airline, which could rise to 25% plus one share in the event of a hostile takeover bid as Berlin says it seeks to protect thousands of jobs. Economy Minister Peter Altmaier insists there will be no meddling with corporate decisions.
The Czech Republic is seeking more control over flight group Smartwings, the parent company of Czech Airlines. Industry Minister Karel Havlicek said the government could even take over the group completely, but executives replied that no one had expressed any such desire for that to happen as they preferred a state-guaranteed credit line to see the company through the coronavirus crisis.
Portugal’s flag carrier TAP has asked for a state-backed loan to secure the survival of the company. Employees want more state control through direct financing, with Prime Minister Antonio Costa raising the possibility of nationalizing the carrier. TAP is already 50% owned by the state with a 45% stake held by Brazilian-US entrepreneur David Neeleman. TAP employees hold the remaining 5% in shares.
Indirect state aid has come to the rescue of Norwegian, Norway’s budget carrier that has completed a painful restructuring process and secured a credit guarantee from the government. Major lessor AerCap now holds a 15.9% stake after converting lease obligations into shares. BOC Aviation holds a vital 12.67% stake in Norwegian — and BOC is ultimately controlled by the state-owned Bank of China.
Earlier this month, Singapore Airlines announced its first-ever annual loss in its 48-year history after grounding most of its fleet due to the pandemic-caused lockdowns. The carrier is already majority-owned by the government investment and holding company Temasek, which holds well over 50% of voting stock. The government has always stressed its non-involvement in the management of the airline.
Of the government-owned airlines, the Gulf carriers Emirates, Etihad and Qatar have often raised eyebrows among rivals in many parts of the world. The latter have said the airlines in question aren’t really playing fair, saying their business model is to crowd out competing airlines at any (state) cost. Before the pandemic, the three carriers had grown disproportionately for years.
Aeroflot Group, which includes Russian flag carrier Aeroflot, Rossiya and Pobeda, is another case in point. It is 51.2% state-owned. But you don’t really have to look far to find more airlines in this category. Right now, there are roughly 150 state-owned carriers around the globe, according to Wikipedia. It’s not the rule, though, as there’s an impressive total of about 5,000 airlines globally.