Partial nationalisation appeared within reach Monday for German airline Lufthansa, facing the prospect of lingering fallout from the coronavirus and feared to be at risk of foreign takeover.
Sources close to talks between Berlin and Lufthansa bosses told AFP the two sides had an "in-principle" deal along the lines confirmed by the company last week.
That rescue plan, totalling nine billion euros ($9.8 billion), would see Berlin would take a 20-percent stake in the airline group, as well as a convertible bond worth five percent plus one share -- allowing it to claim a blocking minority shareholding to shut out hostile takeover attempts.
The package would also include a three-billion-euro state loan to the airline as well as two government-appointed seats on the supervisory board.
And conditions will likely include "the waiver of future dividend payments and restrictions on management remuneration", Lufthansa said Thursday.
The group had already suspended its dividend payout for 2019, saying that it needed cash on hand to weather the coronavirus storm.
Approvals from Lufthansa's supervisory board and the government's economic stabilisation fund (WSF) are widely seen as a formality.
That leaves sign-offs from shareholders -- who must agree to any plan that would dilute their investments -- and competition regulator the European Commission as the two final hurdles for the rescue.
German business daily Handelsblatt reported Monday that Chancellor Angela Merkel plans to resist potential tough conditions from Brussels, which could include Lufthansa giving up prized landing slots at its bases in Munich and Frankfurt.
1 mn euros per hour
Lufthansa headed into May with around four billion euros of liquidity on hand, but chief executive Carsten Spohr said it was haemorrhaging around one million per hour as 90 percent of its fleet has been grounded.
In the first quarter alone -- when the full impact of the pandemic was yet to be felt -- the group reported an operating loss of 1.2 billion euros, forecasting an even bleaker result in April-June.
The cash drain did not stop politicians in Chancellor Angela Merkel's coalition government spending weeks wrangling over the details of a possible rescue.
Conservatives wanted to minimise state involvement and control, while centre-left leaders hoped to fend off job cuts and hold the airline to environmental objectives.
As Berlin dallied, Lufthansa's subsidiaries Brussels and Austrian Airlines took up talks of their own with their respective capitals, with Austrian hoping for 767 million euros from Vienna.
Meanwhile Bern will guarantee 1.2 billion euros of loans to Lufthansa's Swiss arm.
No clear skies ahead
With an effective vaccine and any prospect of snuffing out the pandemic still many months -- or even years -- off, the airline industry faces a long, slow recovery filled with potential pitfalls.
International Air Transport Association (IATA) chief Alexandre de Juniac told AFP last week that the industry faces the loss of around $314 billion in revenues in 2020 alone.
"There is no precedent for a crisis of this level," de Juniac said, adding that the IATA does not expect air traffic to return to its pre-crisis level until 2023.
Lufthansa boss Spohr has warned that the company likely now has 100 planes too many as a result, putting around 10,000 jobs in danger.
A far-reaching restructuring remains on the cards even after Lufthansa at the weekend confirmed reports that it plans to double its active fleet to around 160 aircraft in the coming weeks, adding some of Germans' favourite Mediterranean holiday destinations back onto its much-reduced flight plan.
The majority of its roughly 760 planes will remain grounded as coronavirus restrictions are lifted only gradually.
