Lufthansa in Talks With Airbus and Boeing on Order Deferrals

Lufthansa CEO Faces Anxious Investors as Bailout Talks Continue

(Bloomberg) -- Deutsche Lufthansa AG Chief Executive Officer Carsten Spohr said the airline is in “intense” talks with Airbus SE and Boeing Co. about postponing plane deliveries as he set out plans for surviving the coronavirus storm.

Facing shareholders at the German company’s annual general meeting -- held online because of the pandemic -- executives said they couldn’t answer questions about negotiations for a government bailout, but that it’s in noone’s best interests to see a collapse.

Lufthansa in Talks With Airbus and Boeing on Order Deferrals

“The future of Lufthansa is being decided in these days,” Spohr told the meeting. “It is about avoiding an insolvency with the help of the governments of our four home markets.”

Spohr is seeking to slash spending and rein in Lufthansa’s operations to survive a travel collapse that’s punctured a decades-long aviation boom. At the same time, he’s pursuing state support worth as much as 12 billion euros ($13 billion) from Germany and the three other countries where the group has units.

Lufthansa shares traded little changed as of 12:46 p.m. in Frankfurt after earlier gaining 3.8%. The stock has lost 51% of its value this year, on a par with Air France-KLM, which is also seeking aid, but steeper than declines at discounters Ryanair Holdings Plc and Wizz Air Holdings Plc.

The crucial German bailout, which could total 10 billion euros, has been held up as Lufthansa resists ceding influence to the state, people with knowledge of the matter have said. Karl-Ludwig Kley, chairman of its supervisory board, told the AGM that questions regarding details of the talks wouldn’t be discussed.

Spohr said negotiations with Airbus and Boeing over fleet plans are “intense.”

Lufthansa has already announced plans to permanently reduce aircraft numbers and close discount arm Germanwings to resize for what it warns could be years of depressed demand.

The group has 123 outstanding orders for Airbus planes, comprising 96 A320neo-series single-aisle jets and 27 A350-900 wide-bodies, and 40 for Boeing models, split evenly between the 777X and 787 Dreamliner.

Supervisory board member Michael Niggemann said it’s impossible to give a market outlook for the second half, while disclosing that Lufthansa is burning through 800 million euros a month despite having shut down almost all of its operations. A capital increase can’t be ruled out at some point, he added.

The company, in danger of running low on cash within weeks, said it’ll scrap a planned dividend and isn’t sure when it’ll return.

Spohr said Lufthansa is focused purely on its own situation and that there are no plans for a takeover of Alitalia SpA, the Italian airline that filed for bankruptcy protection long before Covid-19 struck. Vanessa Golz of shareholder Deka Investment had said the issue was one that needed to be clarified.

Talks with the German government are coming down to how much the state will profit from the rescue in future years, according to the people, who asked not to be named discussing private negotiations.

Lufthansa has already secured aid from Switzerland for its unit there in the form of 1.28 billion Swiss francs ($1.4 billion) in credit guarantees and is negotiating packages in Belgium and Austria, where it’s asking for 767 million euros in support from Vienna, mostly in repayable loans.

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