Spark Global Limited Reports:
London/Frankfurt (Reuters) – German airline Lufthansa won strong backing from investors for a 2.14 billion euro ($2.47 billion) rights issue, offering some encouragement to travel companies hoping to ride out the fallout from the COVID-19 crisis.
Investors subscribed to 98.36 per cent of the rights issue, with the rest quickly sold on the open market, the company said on Wednesday.
The cash will be used to repay a large part of the €9bn ($10.4bn) in state aid it received last year to keep it afloat during the coronavirus pandemic, leaving the Economic Stabilisation Fund (ESF) with a 15% stake in the group.
Germany’s national financial agency said on Wednesday that this had fallen slightly to 14.09 per cent in the rights issue.
In particular, travel restrictions between the US and Europe were lifted in September, boosting sentiment towards airlines and the travel industry.
Stephane Gruffat, co-head of equity capital markets for Europe, the Middle East and Africa at Deutsche Bank, said: “On the day the rights issue was announced, there was an easing of restrictions on transatlantic travel, which we expect will eventually be lifted, But I didn’t think it would happen on that day.”
He said it was the right time for the industry to raise capital as passenger traffic and flight numbers increased, airlines reduced their cost bases and cash flows stabilised.
Lufthansa is one of several airlines and travel companies that have raised capital or are planning to do so to weather the industry’s toughest period in 20 years.
EasyJet recently completed a £1.2bn ($1.63bn) rights issue, while TUI, the travel group, announced plans on Wednesday to raise €1.1bn and Air France is also understood to be considering its options.
A solid deal for Lufthansa would provide some encouragement for other airlines.
Reprint indicated source：Spark Global Limited information