Capital calls: Lufthansa’s capital increase may not be enough

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Lufthansa planes are seen at the airport in Frankfurt, Germany, June 25, 2020.

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OVERLOAD. Deutsche Lufthansa‘s (LHAG.DE) plans for a large cash injection from shareholders may not be enough to ensure a stable financial drain. The German carrier is looking to bring in equity investors for € 3 billion, Reuters reported on Monday for more information. That’s almost half of its market value of 6.5 billion euros. The main goal of CEO Carsten Spohr is to repay the 1.3 billion euros of hybrid equity that the German government injected a year ago, as well as to repay loans worth an additional one billion euros from Austria, Belgium and Switzerland.

If the capital increase continues, Lufthansa’s net debt will fall to 9.2 billion euros. According to Refinitiv’s forecast, EBITDA is 21 times higher than expected for this year, and 3 times more worrying than the figure that analysts predicted for next year. The divestitures should make more money, but another summer washout could mean more losses. Shareholders may have to cough again. (By Ed Cropley)

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