For weeks, the federal government, Lufthansa and the EU worked on a rescue plan for the airline that is submitted to a shareholders’ vote on 25 June at 12:00. Before the extraordinary shareholder meeting, the major shareholder Heinz Hermann Thiele takes centre stage.
All eyes are on self-made billionaire Thiele, who, as the largest shareholder with a stake of 15.52 percent, could prevent state entry alone. The reason is the low participation of less than 38 percent of the voting rights in the shareholders’ meeting taking place on the Internet, which gives Thiele a blocking minority since approval would need two-thirds of the votes.
Born 2 April 1941, 79-year-old Heinz Hermann Thiele is the third-richest Germans. Bloomberg estimates his fortune at over US$ 16 billion. But Thiele didn’t inherit it – he’s a self-made billionaire.
As a 28-year-old, after completing his law studies at Ludwig Maximilian University of Munich in 1969, he started working for the local medium-sized company Knorr-Bremse as a clerk in the patent department. In 1979 he became head of sales. In 1985, when the grandson of founder Georg Knorr wanted to sell his shares, Thiele was commissioned to find a buyer. During the process, Deutsche Bank told him that if he bought it himself, the bank would act as guarantor. He purchased a controlling stake and later became sole owner.
He did not follow the advice of a management consultant to sell the brakes business and to specialise in industrial tyres and did exactly the opposite. He turned Knorr-Bremse into a profitable world market leader for train and lorry brakes with sales of more than six billion euros.
Thiele resigned as Chairman of the Supervisory Board at the age of 75 and now returns to the Board at 79. His daughter Julia is also on the supervisory board, the two hold about 65 percent of the shares.
When Knorr-Bremse closed a small plant in Berlin in 2017, the IG Metall union district chief attacked him as an anti-social “Stone Age capitalist” who destroyed jobs out of sheer greed. To date, the group does not have a collective labour agreement with the union.
Thiele became a major shareholder in Lufthansa at the beginning of March. Via his investment company KB Holding, he initially exceeded the three percent reporting threshold on March 5. At that time, the stock cost around eleven euros. Less than two weeks later, Thiele topped up a good ten percent of Lufthansa for around nine euros per paper. The frequent flyer owns exactly 15.52 percent of the Lufthansa Group since mid-June.
Thiele now complains that Lufthansa management could have better negotiated the terms of the rescue package. Since then there has even been a meeting with the Federal Ministers of Finance and of Economy and Lufthansa CEO Carsten Spohr.
According to a report by the “Frankfurter Allgemeine Zeitung” Thiele now wants to agree to the rescue package for the battered airline. This would stand in the way of the state’s entry into the airline. “I will vote for the resolution,” Thiele told the newspaper on Wednesday. He had previously indicated that he did not want to stand in the way of the rescue.
At around 300 million euros, the share participation is actually the smallest part of the 9 billion euro rescue package, but the only lever for the old shareholders. After all, their shares would be heavily diluted by the new shares for the federal government which are to be issued at a preferential price of EUR 2.56, around a quarter of the current market price. Without the participation, however, the entire rescue package including silent participation and KfW loan would have died.
Holding companies such as DWS and Union Investment, therefore, want to vote for the corporate action, because in the event of bankruptcy there is a risk of a total loss.
Although Thiele’s opposition to state entry has been around for days, investors seem to expect that the bailout will somehow succeed.
However, industry circles speculate that Thiele could pursue the hidden plan to further expand its influence at Lufthansa in the event of bankruptcy. Alone or with partners, he could offer a mass loan of several billion euros after he had prevented the state from entering into the capital. This could give Thiele a decisive influence on the future of the group.
According to CEO Carsten Spohr, the group has prepared for a possible failure of the rescue plan. “If the stabilisation measures cannot be implemented, the board will try to apply for a so-called protective shield procedure,” says the invitation to the general meeting. The abrupt stop of flight operations, the “grounding”, should be prevented. Spohr will then quickly speak to the state again about necessary bridging loans.
The protective umbrella is the mildest form of bankruptcy under German law. It would give the current management a free hand to get rid of expensive contracts with suppliers, service providers, landlords and also with their own staff. Passengers would also have to worry about reimbursements for tickets that have already been paid for. The group with 138,000 employees also believes that 22,000 jobs are too many on board.
Workers fear a clear cut if they go bankrupt. It is not for nothing that, according to their own statements, the trade unions have offered the flying personnel in Germany savings of more than one billion euros if there is job security. Verdi Vice-President Christine Behle warned: “Insolvency would destroy Lufthansa employee structures and permanently damage public confidence in Lufthansa. State aid can save jobs and secure income.”
(With input from Airliners.de and Wikipedia)