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Capital Calls: Lufthansa’s capital raise may not be enough

2 minute read

Lufthansa planes are seen at Frankfurt Airport, Germany, June 25, 2020.

LONDON, May 11 (Reuters Breakingviews) - Concise insights on global finance.

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OVERLOADED. Deutsche Lufthansa’s (LHAG.DE) plans for big cash injection from shareholders may not be enough to ensure a stable financial flight. The German carrier is looking to tap equity investors for 3 billion euros, Reuters reported on Monday read more . That’s nearly half its 6.5 billion euro market value. Chief Executive Carsten Spohr’s primary objective is redeeming the 1.3 billion euros of hybrid equity the German government injected a year ago, as well as repaying loans worth a further billion euros from Austria, Belgium and Switzerland.

If the capital hike goes ahead, Lufthansa’s net debt will fall to 9.2 billion euros. That’s a whopping 21 times expected EBITDA for this year, according to Refinitiv forecasts, and a still-worrying 3 times the figure analysts have pencilled in for next year. Disposals should bring in more cash, but another summer washout could mean more losses. Shareholders may need to cough up again. (By Ed Cropley)

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