Pension deal clears way for sale of Lufthansa

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BONN - The privatisation of Lufthansa is to go ahead as a matter of urgency following agreement over the airline's pension liabilities, writes John Eisenhammer.

Theo Waigel, the German Finance Minister, said the government intended to sell its 51.4 per cent stake in the national carrier in stages, probably before the end of 1995. At current market values, the state's share in Lufthansa is worth more than DM3bn ( pounds 1.23bn). The cost to the government of the pension fund solution was put at nearly DM2bn.

A reduction in the state's 51.4 per cent stake is expected to begin this autumn, initially by means of a capital increase in which the government will not participate.

Jurgen Weber, Lufthansa's chief executive, said the way was now clear for giving the airline a new structure by dividing it into smaller, more flexible, independent units.

'This reorganisation is only possible after privatisation. It is a matter of utmost urgency, for only a strong Lufthansa can defend itself in the murderous competition of the airline business,' he said.

Matthias Wissmann, the Transport Minister, said privatisation and the strengthening of Lufthansa's capital base were essential for it to become a real global player. 'You only have to compare the developments of BA and Lufthansa in the Eighties and early Nineties to see the benefits of radical restructuring and the problems of delayed privatisation,' he said.

The pension problem arose because once the state's share in Lufthansa dropped below 50 per cent, the airline's employees could no longer belong to the national fund for public employees.