Germany to sell pounds 1.7bn stake in Lufthansa
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Your support makes all the difference.The German government yesterday unveiled plans to sell its remaining 35.7 per cent stake in the national airline Lufthansa.
At current prices, the 140 million publicly owned shares are estimated to fetch about DM5bn (pounds 1.7bn), making the Lufthansa offering the second biggest sell-off after last year's flotation of Deutsche Telekom.
As with the Telekom shares, the government wants many small investors to buy into the world's fourth biggest airline. "Special incentives will be provided to encourage private investors to take up the offer," announced Theo Waigel, the Finance Minister.
The size of the discount is yet to be decided, but private investors who place their orders early are promised preferential allotments.
Ahead of the flotation on the Frankfurt Stock Exchange on 13 October, the government is organising "road shows" through Germany, the rest of Europe and the US.
The initial price, based on the price of Lufthansa shares already being traded, will be fixed between 29 September and 10 October. The offer price will be announced during the weekend of 11-12 October.
Lufthansa shares were first listed in 1966, and the government sold 15.7 per cent of its holding in 1994. With increased competition in the air, it was felt that only a private concern could survive. On 1 April this year, the skies over the European Union were thrown open to European competition.
"State-owned airlines are an anachronism in a liberalised air transport market," said Matthias Wissmann, Minister of Transport. "As competiton becomes increasingly fierce throughout the world, a successful airline needs as much enterpreneurial scope as possible."
Lufthansa last week announced the best interim results in the company's history. Half year sales reached DM10.7bn, up 9.1 per cent from the same period last year, and pre-tax profit tripled to DM397m.
Lufthansa shares were trading at DM36.50 yesterday, up 1.7 per cent.
The German government expects to be DM1bn richer from the proceeds. Although Mr Waigel cannot use the income to bring the government deficit under the Maastricht threshold of 3 per cent, the income will cut the total public debt burden.
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