Lufthansa CEO Carsten Spohr and his CFO Remco Steenbergen really gave it their best shot when they tried to make the just-announced capital increase palatable to investors early Monday morning. Spohr, for example, stressed that they now really see that business travel is coming back. Because the summer business had gone so well, Lufthansa would report an operating profit for the third quarter, Steenbergen said. And in the turnaround currently underway, they are structurally taking annual costs of 3.5 billion euros out of the company.

Still, the question arises: why now? The timing of the capital increase, which is expected to bring Lufthansa 2.1 billion euros, is "puzzling," and not just in the view of Bernstein Research analyst Daniel Röska. After all, he says, the share price has been sliding steadily in recent weeks, the main long-haul routes to the U.S. are still largely closed to Europeans, demand is still well below pre-crisis levels, and capacity for 2021 is expected to be just half of what it was in 2019. The question of who will actually form the federal government in Germany in the future and thus set the political direction in environmental and aviation policy has also not yet been answered, adding to the uncertainty. In short, according to Röska, delaying the capital increase until at least the long-haul routes had been reopened would probably have been more popular with investors. But above all, the company does not need any fresh money at the moment.

The presumed answer to the timing question can be found in the fine print and in the archives, so to speak: Lufthansa wants to get rid as quickly as possible of the state shareholding that, in its own perception, restricts it too much entrepreneurially and, above all, serves old traumas of too much state influence among those who have been with the Group for a long time. Back in the early 1990s, when Lufthansa was facing an existential crisis, it was still partly state-owned. On the other hand, it was only able to avoid insolvency last year thanks to state intervention.

Germany, Switzerland, Austria and Belgium provided a total of around nine billion euros - but Lufthansa only had to draw on a fraction of this because it had already regained access to the capital markets with bonds in the fall of 2020.

The Group actually wanted to have repaid the state aid by the time of the German parliamentary elections

When Lufthansa presented its plans for a capital increase in the spring, Spohr had hoped that the airline would repay the state aid - if possible - before the German elections. That hasn't worked out now, but at least it now has a clear timetable not only for that, but also for the exit of the Economic Stabilization Fund (WSF) as a shareholder. Lufthansa plans to repay 1.5 billion euros from the so-called Silent Partnership 1 before the end of October, and another one billion from Silent Partnership 2 by the end of the year. Lufthansa will also cancel the unused portion of Silent Partnership 1, amounting to three billion euros, and will thus no longer have access to it.

In this way, Lufthansa avoids expensive interest rates, which would have risen sharply in the coming years for the aid. However, the consequences for the actual state shareholding are also decisive: WSF currently holds a 15.84 percent stake in Lufthansa. Should it participate in the capital increase, it undertakes to start selling its shares after six months at the latest and must have disposed of the entire package after two years at the latest. WSF does not intend to comment on the issue until after the end of the subscription period on October 5.

Should it exercise all subscription rights, it would have to pay 340 million euros for the shares, but it could also sell all or part of the rights. As the shares are being offered significantly below the current stock market price, the federal government could probably make a significant book profit on a subsequent sale. WSF had acquired the original 20 percent stake for a price of 2.50 euros, but had already sold off part of it, also at a large profit.

Lufthansa is offering the new shares at a deep discount: They are to cost 3.58 euros as part of the capital increase, 56 percent below last Friday's closing price. Shareholders can buy one additional share for each share held. However, a consortium of 14 banks fully guarantees the capital increase. Several investment funds managed by Black Rock have committed themselves to fully exercising subscription rights in a volume of 300 million euros. And all Lufthansa Group board members also want to buy as many shares as they are allowed to.