Lufthansa received nine billion euros in state aid over two years to save it from the corona pandemic. The airline not only repaid the loans with interest, the state is now making a big profit with a package of shares that it received for the rescue.

For the first time in three years, Lufthansa wants to be in the black again this year. The airline also has the federal government to thank for the fact that this is possible at all. When air traffic collapsed worldwide in 2020 due to the corona pandemic, the state helped out with a stabilization package totaling nine billion euros. For 306 million euros, the federal government acquired around 20 percent of the shares in Lufthansa in 2020. Both are now proving to be excellent deals.

The State Economic Stabilization Fund (WSF), from which the funds came, has now announced that it has sold all Lufthansa shares back to investors – at a significant profit. The fund received 1.07 billion euros from the sale in several tranches. The bottom line is that there is a profit of 760 million euros. But that’s not all: Lufthansa had called for aid of over 3.5 billion euros from the WSF package. These had to be repaid with interest. The interest rate started at 3.75 percent per year and later could have increased up to 9.5 percent.

Because business was already improving again in 2021, the airline was able to fully pay off its debts to the state by November last year. Lufthansa boss Carsten Spohr put the interest payments at a total of around 92 million euros. This increases the total proceeds from the rescue for the state to 852 million euros. Based on the stake of 3.8 billion euros, that would be a return of 22 percent over two years – a good deal. The rapid repayment of the loans was a prerequisite for the WSF now disposing of the shares. According to the agreement, he would have had until the end of 2023 to do so.

Lufthansa is not the only major corporation in which the state has a stake. The federal government has owned 25 percent of the shares in the major bank since the financial crisis of 2008. In addition, the then special fund for financial market stabilization (SoFFin) provided a silent participation of 8.2 billion euros. Commerzbank was able to transfer back the stake by the end of 2013. Since then, the federal government has already received an additional 1.4 billion euros through interest and dividends.

Nevertheless, he continues to hold the block of shares, whose stake in the entire bank has now fallen to 17 percent after capital increases. Federal Finance Minister Christian Lindner (FDP) would rather sell it today than tomorrow, but that doesn’t work without a stomach ache. The reason: the state would need a share price of around 26 euros to compensate for its commitment at the time. The price is currently at EUR 7.80. If Lindner sells now, he has to realize a loss of 3.9 billion euros. He could blame his predecessors, who bought the shares so dearly in 2008, but the government still doesn’t make it look good today.

It is possible that the investment will still pay off in the future. Analysts assume that sales will hit the 10 billion euro mark by 2024. The profit could then rise to 1.9 billion euros, and dividend payments would also go up accordingly. This year will see the first dividend since 2019. The federal government could earn almost 45 million euros with it.

In addition to Lufthansa and Commerzbank, the federal government also bought into the energy group Uniper this year as part of the company rescue. The Düsseldorf-based company received an aid package worth nine billion euros from the Kreditanstalt für Wiederaufbau (KfW) in the summer. Most recently, this was expanded to 19 billion euros, whereby the federal government would then receive a 30 percent stake in the company. After new financial problems is now even a majority stake of more than 50 percent. The government would then effectively take over the energy company from the Finnish parent company Fortum.

It remains to be seen whether this will be just as profitable in a few years as the Lufthansa rescue. Information on the interest rate of the KfW loan is not yet available. However, Uniper’s total interest payments for its debt financing increased by EUR 63 million in the first half of 2022. This includes, among other things, a first credit line from KfW of over two billion euros, which was only fully drawn down in the summer.

In addition, the state still holds a few shares in companies that are important to the general public, i.e. in the national interest. This includes a 17.4 percent stake in Deutsche Telekom, 21 percent in Deutsche Post DHL, 23 percent in vaccine manufacturer Curevac and 25.1 percent in arms manufacturer Hensoldt. However, these investments should not be sold so quickly.

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