EGM 2020

Jun 25, 2020

Shareholders of German Lufthansa. I hereby open the extraordinary general meeting due to the corona pandemic, it's only virtual. No physical presence of the shareholders a very warm welcome to everybody who's tuned in online. Present here are the CEO, Carsten Spora, and Michelle Niggeman, Member of the board for HR legal affairs and M and A. The other members of the board are following this meeting via broadcast. From our seats, right? And also on the side of the supervisor brought all other members, Christina Bella, Thomas Anders, and Mr. Elliott Schwartz are present. There are other members of the Supervisory Board will also be following this meeting via broadcast. Mister Notary casting from Schenk is going to ensure the documentation of this general meeting. I believe this is going to be the last in this year, A very warm welcome to suspended lawyer, lower share flight attendants, all of them, and Mike Michai Clement. All three of you would rather be flying, of course, Today, you are helping us out here in order to make that happen soon. Thank you very much for that. Ladies and gentlemen, this is truly an extraordinary general meeting. For us, it is of historic impact. It's important remembers as of the refundation of films in 1955 in the privatization in 1997. This special importance has been impacted and magnified by the statements of Hans Herman Taylor, there's no change. It is historic. So he's fine with this agreement. 2017 to 2019 were the most successful years in our history. Impact of the coronavirus crisis were all the more bitter, we were it's not, it wasn't our fault. We were not able to flight today, more than 80% of our aircraft are grounded. There is no quick return to the pre crisis levels. A quick return to the magnitude and greatness pre crisis is nowhere to be seen. We simply don't have any money. We've been living on the reserves that we've been able to amass during good years. Soon, most of it will be gone without help in the next days to come and solvency is looming. For the time being, we haven't been forced to file for insolvency because we have a forecast for business continuity and the COVID act is helping us as well. If you approve of a participation of the ECB, of the, economic stabilization acceleration act, we will be able to work on the recovery of the Lufthansa and restore success, there will be no insolvency. The supervisor board has the responsibility to prevent insolvency. Therefore, despite many misgivings, the CPvisory Board has agreed to the proposition of the this decision. So we are asking for your approval as well. The present concept will be assuring survival at the same time, it's going to give us a chance to keep our leading position and to regain it on the international basis. Let me be very clear about this. Sometimes it is displayed misleadingly. And it is not like in other countries. Lufthansa is not getting any grant not to be repaid from the states. Certainly, our capital is being increased at a stock exchange price below the current price. All in all, there is a tremendous financial and structural burden from these measures. For the government, it is quite a good deal. And as taxpayers, we are quite pleased with that as well, as members of Lufthansa, it is a tremendous burden. The so called stabilization measures are not the solution to the crisis. It's just buying us time in order to mass of this crisis ourselves. The consequence is that Lufthansa will have to restructure itself. Against this backdrop, it is very important that the state and Lufthansa keep in mind the original targets of the economic stabilization, excellent. Those are the participation of the state is only for the sake of stabilizing Nufthansa. A swift exit of the state after stabilization is part of the foundation upon which we have agreed on these measures. 2nd, there will be no political influence in the operating business of Lufthansa. 3rd, the organization will be responsible for all the stakeholders, employees, and customers as well as for the society at large and the environment. The state is not a better entrepreneur, This is what has been demonstrated in history of Lufthansa before and after 1997, Would we have preferred another course of action by the state? Yes. Did you want to have another concept for assuring our future? Yes. But imagine you are responsible for over 100,000 employees. You have no alternatives What we've reached in the negotiations was limited. More than what the board was able to achieve, well, the supervisor board thinks that this is the maximum. In the last weeks, we've had very intense negotiations with members and representatives of the federal government, they were difficult. They also have been impacted by the coronac crisis. Time constraints were significant, many of our employees were taken to the limits. Last week have been a roller coaster of emotions and topics. It was very intense indeed. Sometimes, We had to change our course of actions. Therefore, in the name of the intersupervisor board, I'd like to thank the executive board and all employees involved. You achieved truly great things. The board, the senior management and many of our very fine employees have been working tirelessly during the trying times of shutdown and restart, despite the lingering uncertainty. They keep doing it. I'd like to thank them as well. Thank you to all the employees who would have liked to work, but were not able not allowed to. In many ways, they have shown their solidarity with this amazing company. Just one example. Austrian restarted flight operations after quite a few weeks at 5 am, hundreds of employees came in their uniform to the airport to welcome the first passengers. Where do you find such people, such cohesion. We thank very much our employees for their determination during this enormous uncertainty against all odds, against all adversity, I am very much impressed how much positive and can't confidence you have shown. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] And I couldn't keep on from Metabat and for him look. Yesterday, I've seen it. Employees here at the at the Asian centers. I was there hidden by my facial mask we have another demonstration of solidarity from our employees. We'll do this. We'll do it. If you housekeeping details, Unfortunately, this is required for a GM, maybe the legislator will be able to allow us to dispense with this if a member of parliament is listening, here we need to act as well. So here we go. The framework agreement for the stabilization measures was made public with the convocation of this general meeting. This is very well known. This framework agreement will become the framework contract the declaration of obligation that will be published on our homepage after signing. This meeting is being bought across by all our online service you find all the necessary data in the convocation until the Q And A sessions, this is public to everybody who's interested. We have live broadcasting and all the technical aspects have been thoroughly examined. We are convinced that the virtual GM is technically feasible in an orderly manner. Mr. Noted Republic has been familiar that in himself in great detail. He was able to assess the technical details. So he's a legal man. He knows everything. No. Objection here, you can exercise your voting rights by absentee vote or instruct in low funds are nominated proxy. Registered shareholders can vote until the beginning of the vote using our online service or using the email option. The email address is also in the convocation. As I said, do instruct as well, lufthansa nominated proxies. I will highlight the moment as of which no voting rights will be able to be exercised. Questions were to be filed by the 22nd of June at midnight via the online service. During this GM and no more questions or motions are possible, the convocation of this EGM with the agenda was made public in the federal journal, and that this EGM is convened with our relevant formal and notice requirements observed. A printout of the federal journal is in the hands of the notary. He will attach it to the documents for this meeting according to the declaration of the board, the necessary pursuant to Section 125 to the Stock Corporation Act, everything was done with all relevant formal and notices. We're quite All necessary documents are accessible via the website including the framework, agreement objectives against the resolutions of the general meeting can be filed until the end of this meeting, Mr. Noted Republic was able to assess the well functioning. The participant register has only the present shareholder representatives and the physical presence. This is also to be consulted. We are now getting to the agenda. The cell agenda item, you can see the complete wording from the 3rd June 2020 in the Federal Journal. We have also sent you the complete wording. You can have it on the internet site as well. I will not repeat the complete wording. It is the following resolution on stabilization measures pursuant to the German stabilization fund act for the recapitalization of the company consisting of a capital increase of 1,000,004,326.40 against cash contributions, excluding the subscriptions rights of the share of into Section 7 of the German Economic Civilization Acceleration Act, the granting of a conversion, right, in favor of the economic stabilization funds for the asylum participating 2A as well as on the conditional increase of the share capital pursuing to Section 7A of the AGEM Economics Deposition Exylation Act. You might call it, Lufthansa active, our strong Lufthansa active, if you'd like. Contention Capital 2020, to amendment of the Arctic's authorization and the granting of the conversion rights in favor of the economic stabilization fund for the Senate that is waiting to be as well as the conditional increase of the share capital pursuant to Section 78 of the German economic stabilization, acceleration act, condition capital 2020 3 amendment of the Artex of Association. So I'd like to ask Mr. Spohr to explained the planned measures to us, Mister Spohr, you have the floor, please. Zach, I got to activate it in. Zach, gotta talk. Yeah. Shareholders. Very warm welcome to this extraordinary general meeting, Mr. Clive just said it We have one item on the agenda. The impact is immense The resolution proposal has 3 stabilization measures. The federal government And the, ESF has granted these possibilities, and we are asking for your approval We are asking for nothing less than for your approval to save the German Lufthansa. Beyond all doubt it's an historic moment for our company. It's not the first crisis for Lufthansa. We have highs and lows in our company history in 1926 the old Lufthansa was founded in Berlin. Very quickly, it became a pioneer of aviation In 2nd World War, aviation and operation had to be stopped the company liquidated 10 years after the end of the war, 1955, a new Lufthansa could take off again. 1997 we were completely privatized. Today, looked under group as York's leading aviation group, we are competing with the largest division groups from the U. S, China and the Gulf region. The last 3 day years have been the most successful in our history. At the beginning of the year, however, this success story came to a screeching halt due to the corona pandemic, like all airlines all over the world, It was not our fault. But abruptly, we were in a very dramatic crisis. I think I'm speaking for our partners. You, the shareholders, our employees, if I say, this situation It's very painful for all of us. A few weeks ago, I was speaking to you, shareholders. During the AGM in May, I talked about 3 phases grounding restart and the phase of new normal. During the grounding phase, almost the entire fleet was on the ground. We were very relieved that we could leave the space behind. All elements of the group could restart. Step by step frontier's borders are reopening, and we have been extending our flight service. 2000 testing airline operation per week to 130 destinations in the weeks and months to come, we shall extend continuously our flight schedules. It's a fact we can't do this restart on our early. We can't continue on our own, like all globally acting airline, we need state aid in our case is the stabilization package of the federal government and the ESM. We have credits, sign participation, and showholding. Overall, it's a volume of €9,000,000,000. The antitrust officials of the Commission or the EU have agreed to this package. Part of these measures is subject to the approval of today's general meeting. Share capital for the ESM for the ESF and a grant of a conversion rate for us. This sign participation 2a and 2b. 2a is a take over protection for the federal government. So the ESF can increase itself into 25% plus one share if another investor would like to act against the interest of the federal government to be securus the interest payment, the conversion, right, comes into force. If Lufthansa cannot assure the financial obligations. The capital increase and the the conversion rate means that the subscription rights is suspended. The board and the supervisor board of Deutsche Lufthansa think that this is suitable, necessary, and proportionate. This also applies to the agreed issuance price of per share. Or the issued price depending on the conversion of the asylum participation. We have detailed in great length why we think this is correct. You can see all the details on the website of the company. Nonetheless, I'd like to highlight our rationale, take you through our reasoning. The corona pandemic has almost brought to its knees completely our operating business. Certainly, as far as the passenger revenue is concerned. Booked flights, well, some of our customers had to cancel them new bookings up at a fraction of the normal level. Today, a swift recovery is nowhere to be seen. On the contrary, we know that the impact of this crisis will have a negative consequence for our business. On the basis of everything that is foreseeable today, we need external capital and equity capital with an overall volume of 1,000,000,000 in order to come out of this crisis. Our own funds will not be able to cover our need for liquidity. We have been talked if you're even talking and negotiating with banks, capital providers, we have been able to take 1,000,000,000 on the capital market for a sustainable funding business far from enough. Various audits confirm this. This means the capital market, and despite our good rating, is unable to help us in this very situation. We don't have any options to take foreign capital on board. Therefore, is the bitter truth that legal insolvency is looming if we do not agree to this stabilization package. This package from the civil government is a result of long and intense negotiations. I'd like to thank all participants from the side of the fellow government and from the side of Sufthansa for the professional talks. We have been championing the interest of our customers, employees, and shareholders. We have been analyzing alternatives very thoroughly. We have been suggesting other options. We have been discussing the structure of this package with all stakeholders, all criteria, all elements, all conditions have been negotiated. We had to include in our deliberations in solvency as an option. We have taken precautions for this case as well, we'd like to avoid further grounding. However, we want to prevent insolvency with all its repercussions. And insolvency of Luftense, even in a specific form of a protection proceedings, well, for you, Jason Gentlemen, this would mean that the nearly entire share capital would be lost. For our employees, for our brand and for the cohesion of the group, this is extremely risky. Today, we would like to ask for your approval of the government's ownership stake and the conversion rights of the silent investments to A and 2 B. And this means we also Call on your solidarity to make your very personal contribution to stabilize our Lufthansa group. We know that we are asking for your approval to a dilution of your shares in the company. But nevertheless, we are convinced that the stabilization packet is the best option for all stakeholders for our customers, our employees, and of course, also for you shareholders. Safeguards our solvency in this crisis. It keeps our viability in place and our structure as an integrated airline and Aviation Group. It also protects our strategic and operational independence. In addition, the agreement also means that the government will sell its ownership stake as soon as we have repaid the silent investment, including all interests. We know full well that the readout package, especially such a substantial one, cannot be taken for granted 9000000000 comes attached with great responsibility. We know that we have to repay the money as quickly as possible to the taxpayer. I'm speaking on behalf of 130,000 employees in the world. And I would like to tell you that I'm grateful that the state offers us a perspective for the future. And we are grateful that This rescue was supported by all parties in the German political, will you export? Our politicians know how important Lufthansa is Germany as an export nation. But they also know that Lufthansa is important for Europe as a whole together with the German government Our objective needs to be to defend our top and our leading position in global aviation. As an European aviation group, We would like to link the countries in Europe and in the world also in the future. We want to contribute to European ex support, strength, and to a strong aviation infrastructure. The mailer package is key for our future. Based on market analysis and our business plan, we have identified a capital requirement of 1,000,000,000. For the next 3 years. This is a prerequisite for us to keep playing a leading role in global aviation and to keep modernizing our fleet, especially with a view to the environment. And I would like to repeat what I already said at the AGM in May, viability is the sum of competitiveness plus investment capability. But at the same time, we know that this bailout package is not a gift. We will have to work very hard to pay it back. And selling the government's ownership stake will place a huge burden on us. And even in good times, we would not be able to stand in this to manage this from our free cash flow alone. COVID 19 pandemic and its after effects in the next years require decisive measures. We will use all possibilities to pay back the bailout package. We have already introduced a a program to do so. Now of course, we as a service company, suffer particularly hard because Lufthansa as a group, needs as employees. They are a heart and soul. We are proud of our unique team and the spirit that this team incorporates and embodies. We have a responsibility all these people. Now we have negotiated with our 3 trade unions: the pilots union, Viningham Cookpet and the flight attendants union UFO, These negotiations were very hard and intense, but they were also essential. We have made most progress with the flight attendants union, UFO last night, we could, announce that a deal was concluded that will reduce the personnel unit costs for flight attendants by 17% for the time of the pandemic. We are on course to, conclude a similar agreement with the pilots union for Inigo cockpit. Our talk with the union, with the Verdi union, are more disappointing. We need we urgently need progress so that we don't have to make excess staff redundant through job cuts and involuntary layoffs. Ladies and gentlemen, I would just like to say a couple of words on our most precious precious asset. Our customers, many of our customers have been disappointed and upset because It's taking very long, to reimburse their, council tickets. I would like to apologize for this delay. And I can assure you that all customers who would like a refund for their canceled tickets will get their money back. We have increased funds for that so that we will have paid back all claims in 6 weeks. However, we also receive many expressions of support and loyalty, many of our customers are now looking forward to travel again and to be able to fly again. This is why we are working tirelessly to offer the usual comfort and quality of our service to our customers, both on our route network and in terms of the service we provide on board and on the ground. We are taking the concerns of our customers very seriously. We have introduced new hygiene protocols across the whole travel chain, and we are offering our customers on European Groups, a service called Bringme Home, which will ensure their return, the return to their home countries. Ladies and gentlemen, in May, I already said that we will only see a new normality emerge after the crisis in 3 years. At the very earliest, this is also what our aviation industry group I assess is. We will be a smaller group with 100 aircraft fewer and a leaner structure. But nevertheless, Lufthansa Group will still spire to high quality in terms of service, the service it provides. And I hope that Lufthansa will then be wholly privately owned. And it will that it will be more agile and more efficient and that it will be a group that will successfully defend its position as the leading European airline group. However, this will only be successful if you've approved today's resolution. Which will pave the way for the company's recovery. I'm asking you shareholders of Lufthansa to use your vote to help us become a viable prosperous company once again. I'm firmly convinced that our outstanding aviation group with its excellent employees will be successful again in the future on a global scale and will not let you down. Together, we have a bright future ahead of us. We are facing big challenges. But if you give us your approval, we will be able to tackle them head on. Thank you very much for your support. Fiona Akashbois. Thank you, Mr. Schbois. Let me now say a couple of works on the work done by the supervisory board in all due forms. The steering committee has met several times, just like the supervisory board itself, to discuss the stabilization package medicines the regular meeting of the Supervisory Board in mid March. The steering committee has met 13 times and the supervisory board has met 6 times. We repeatedly discussed the need for government bailout the individual stabilization measures with the attached conditions, the alternatives, and the advantages and disadvantages of accepting the bailout. And we also discussed ways of exiting the bailout program. In a very intense way. Given the worsening of the company's situation, the supervisory board considers the current remuneration of the executive board as appropriate. It took into account that the Executive Board made a substantial contribution to the rescue package by accepting a pay cut of 20% Good and big follow-up on Varriard. For the time, from May through September, announcing variable remuneration and experiencing losses, through the shares held as part of the shareholding scheme? Especially given or against the backdrop of current COVID-nineteen crisis that is beyond our control. The executive board's work is essential. Stees of Haitenas, Angie Messen And Associates. Even given the framework agreement with the economic stabilization fund, the restrictions on the remuneration of the executive board are appropriate. In order to make the company viable, the supervisory board had to accept the deviation from the remuneration system agreed by the AGM on 5th May that has stipulated in the framework agreement. Now under German legislation, the supervisory board still has the power to decide on the remuneration. We will meet in due course to decide whether a new resolution on the remuneration system is necessary and whether this will need to be approved by the shareholder meeting. I would like to give you today's attendance figures. Since the shareholder meeting has been convened, the registered share capital has remained unchanged. At 1000000,224000000,177,292. Indiscosumped. Divided into 478,194,257 no power value shares. Which are attached to as many votes or voting rights in today's AGM. Today, At this meeting, 1,141,000,003,179. No power value shares have received as absentee votes, which corresponds to 15.47 percent of the share capital. In addition, we have received absentee votes for 100 and 40,026,379,000,000 In total, this means, if we add these figures up, this means that currently, we have received votes for a total of 188,006,686. Low par value shares, which corresponds to 39.32 percent of the registered share capital's details on the attendance figures and the list of participants can found on our website. Ladies and gentlemen, all those of you who are watching this shareholder meeting online through our webcast, I would like to tell them that now the public portion of this webcast ends, the remainder of the shareholder meeting to shareholders. I would like to thank all of you who have watched AGM, thank you for your interest in our company. Thanks for your attention. To welcome you back either as customers on our planes or as shareholders. Thank you.