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German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

businessinsider.com

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Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#81

Post by MattGaiser »

tasubotadas wrote: post #33

>The company will take the money but the state won't get a say: this is a concise summary of what Lufthansa's Executive Board, headed by CEO Carsten Spohr, has been telling German politicians in the past few weeks. That's awesome. Create a crappy business, hire 130k employees, and get the state to pay for your failures. At this point, I would be happier that they would just give the money to Google and Facebook which…

One thing that needs consideration is that the state will be taking care of these employees either way.

Either they pay Lufthansa or they pay for the unemployment insurance.

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#82

Post by jplayer01 »

tasubotadas wrote: post #33

>The company will take the money but the state won't get a say: this is a concise summary of what Lufthansa's Executive Board, headed by CEO Carsten Spohr, has been telling German politicians in the past few weeks. That's awesome. Create a crappy business, hire 130k employees, and get the state to pay for your failures. At this point, I would be happier that they would just give the money to Google and Facebook which…

> Create a crappy business, hire 130k employees, and get the state to pay for your failures.

Uh ...

You'd rather Germany sink 10 billion Euros into an American company with barely any German jobs? Over 60k of those 130k are in Germany. If your plan is to cripple the economy, then yeah, absolutely, let all these companies fail and put all these people out of work for a situation that is in no way their fault and there's no feasible way for them to have prepared for such a drastic fall in revenue (for reference, their 2019 revenue was 36 billion Euros with a net income of 2bn).

Also, the value of Google and Facebook to society and the economy can seriously be questioned. They don't even pay taxes in Germany. They have zero benefit to the German economy.

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#83

Post by Loughla »

jotm wrote: post #55
smoyer wrote: post #48

One thing that I think the business world has finally learned during the COVID-19 social distancing is that business travel isn't nearly so important as we had imagined. And attending conferences was always fun but it's been amazing to watch how fast conferences have switched to an on-line format (well ... the technical ones that I would attend). So it's my opinion that the airlines, hotels, conference centers and ta…

I've got a friend who now works from home. Took them all of 3 days to set up. And yet they want her back in the office as soon as possible. Mind boggling to be honest. She's saving so much time and money not commuting and still does the same amount of work. She says she doesn't like it though, the office environment is better. So there's that.

My institution has been trying to bring people back in some format since day 1.

My institution also has an administration that isn't comfortable with only measuring results over actual physical time spent in seats during a project.

I know correlation doesn't equal causation, but I'm betting there's a link in this one.

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#84

Post by Flip-per »

longtermd wrote: post #9
wiz21c wrote: post #4

Does it mean that every german will have to pay about $10B / 80m = 125 euros for that ? So it means that they'll have, for example, to wait a little longer to buy their next phone, or lunch ? (I ask the question here because that's the kind of reasoning I read in the press but I'd like to know if it's as simple as that)

Nope. Because they have already paid all of this in taxes. It means, that the 10 bn won't get 'invested' by the government in another project, e.g., welfare benefits, infrastructure, health, or education. Alternatively, it means: nothing of all of those, but inflation will rise an additional 0.0001% (if the funding source is printing money vs. using tax payer money)

The bailouts that are happening now will increase the state debts, so no, they did not pay all of this in taxes already.

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#85

Post by a3_nm »

netcan wrote: post #78

For the sake of argument.... What happens if no airline gets any bail-out money? Do we end up with worse air travel in a year or two?

And maybe we reduce the total amount of travel, which is crucial to reduce our carbon footprint. These airline bailouts are a huge missed opportunity.

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#86

Post by intended »

dingo_bat wrote: post #49
curiousgal wrote: post #44

Earlier quoted context omitted.

How is it a crappy business? It literally took countries shutting down their borders and people not traveling at all to bring them to their knees.

If an average person were laid off today and couldn't find a job for 1-2 months, would they go bankrupt? I think most people would be able to survive on their savings for a month or two. Companies should also be held to the same standard. They should have enough savings to survive this sort of disruption, just like a person would. So yeah, if your company can't survive a month without revenue, it is a crappier than a…

Simple comparisons of companies to people is a world we long since left behind and are not really valid or useful except in very general rough senses.

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#87

Post by itcrowd »

rndgermandude wrote: post #50

The German media does not have this story (yet?). The best I can find that the German govt made an offer for a EUR 9B bailout, which would be (in large part) a credit which would lead to a commitment of EUR 500M per year in repayments (which the Lufthansa doesn't want), and the govt wants two board sets (which the Lufthansa doesn't want). It is also reported that the Lufthansa is looking into opening a "Schutzschirmv…

Frankfurter Allgemeine reports seem to agree with your statements and also see 1-2 week timeframe for further negotiations. Strange that BI somehow has the scoop.

https://m.faz.net/aktuell/wirtschaft/lufthansa-erhaelt-erste...

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#88

Post by tannhaeuser »

Sadly, France and The Netherlands bailing out Air France and KLM last week, resp., forced the hand and diminished leverage for the German federal state I guess. I thought subsidies (to former state monopolies, of all things) was the one thing that need explicit consent under EU treaties. Now the people of DE, FR, and NL have to bail out a business that has no perspective to return a profit for the foreseeable future. Those who have protested against excessive air travel have to pay the bills long term (before coronavirus, flight shaming and "Fridays for Future" was a thing). I think this is a big missed opportunity to come up with a sustainable agenda to put a large electorate behind as a perspective out of the coronavirus economy crisis.

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#89

Post by netcan »

makomk wrote: post #36
mrep wrote: post #5

Yahoo finance says their market cap is 4 billion [0] and yet they are getting a bailout worth 2.5 times their market cap. That's crazy. [0]: https://finance.yahoo.com/quote/lha.de/

I think Matt Levine has pointed out before that the amount of money it would take to keep US airlines going was likely to be more than their pre-Covid market cap. It's a big reason why the idea that they should just have saved up enough money to not need bailouts instead of paying out to shareholders is a non-starter; the value of the airlines to shareholders is less than the amount it would cost, because air travel…

Got a link to Levine's post?

Re: German government to bail Lufthansa out of bankruptcy with nearly $10B state aid

#90

Post by oaiey »

wiz21c wrote: post #4

Does it mean that every german will have to pay about $10B / 80m = 125 euros for that ? So it means that they'll have, for example, to wait a little longer to buy their next phone, or lunch ? (I ask the question here because that's the kind of reasoning I read in the press but I'd like to know if it's as simple as that)

Are you kidding. We citizen will earn money by that. Germany will borrow 10 billion with negative interest and invest in a solid company at a low point.

Now you can argue, that the flight sector will never recover, which I agree too, but that will not change anything. Lufthansa is a very solid airline. There will be hundreds of small airlines leaving the market with the Lufthansa to pick the market shares up.

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