Lufthansa plans share offer

24th May 2004, Comments 0 comments

24 May 2004 , FRANKFURT - Germany's Lufthansa airline plans to raise about EUR 750 million in a discounted share offer to expand its fleet, the company said Monday. The new capital will help Lufthansa purchase the giant twin-deck Airbus A380, of which 15 have been ordered. The airline will offer investors 76.32 million shares for at least EUR 9.85 a share between 3 and 16 June. The price will probably be determined on 1 June. "With this capital measure, we are investing in the future of our network-carrier

24 May 2004

FRANKFURT - Germany's Lufthansa airline plans to raise about EUR 750 million in a discounted share offer to expand its fleet, the company said Monday.

The new capital will help Lufthansa purchase the giant twin-deck Airbus A380, of which 15 have been ordered.

The airline will offer investors 76.32 million shares for at least EUR 9.85 a share between 3 and 16 June. The price will probably be determined on 1 June.

"With this capital measure, we are investing in the future of our network-carrier model," chief executive officer Wolfgang Mayrhuber said in a statement.

However the news was greeted sceptically on finance markets. In Frankfurt, Lufthansa stocks plunged 6.77 percent to EUR 11.29 during the morning before recovering slightly. Shortly after midday its shares were down 4.71 percent to EUR 11.54.

Lufthansa said it would use the cash injection to expand its profitable long-haul business, finance the introduction of the A380 and invest in new infrastructure and flight operation measures.

On long-haul routes Lufthansa is cooperating closely with other airlines in the Star Alliance as well as other partners, and intends to sell some interests outside of the core business.

Lufthansa believes the 555-passenger A380 with a range of 14,800 kilometres will cut costs per passenger by about 20 percent when it goes into service in 2007.

"Lufthansa, its European partners and the Star Alliance as leading alliance worldwide will generate customer demand which opens attractive growth perspectives," a statement said.

In addition, Lufthansa has two "central and growth-oriented" airport hubs in Frankfurt and Munich in which passenger traffic on feeder flights can be "flexibly and profitably" managed.

The share offer will be to existing airline shareholders at a ratio of one share to every five held. Owners of the new stock will be entitled to the company's 2004 dividend, Lufthansa said.

The sale will be managed by a bank consortium led by Dresdner Kleinwort Wasserstein and Morgan Stanley.

Financial analysts said the share offer came as a surprise in view of the airline's recent strong results, with many viewing it as a negative development.

Investment managers Merrill Lynch downrated the stock to "neutral" from "buy", while one analyst said the share issue showed possibly that the company could not finance its investment in the new A380 from current resources.

Another analyst rated the move a "wise" precautionary measure enabling the company to be equipped for possible negative security developments and increased airline competition particularly from budget carriers.

 

DPA

Subject: German news

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