Lufthansa is not planning a capital increase in 2010, Chief Financial Officer Stephan Gemkow told a newspaper, adding that shareholders are likely to receive dividends this year after losing out in 2009. "There is currently little appetite for a capital increase because we are generating greater cash-flow than we originally expected from our operating business," Gemkow was quoted as saying in Saturday's edition of Boersen-Zeitung daily.
He also downplayed the financial impact of a credit rating downgrade to junk status by Moody's last year, saying that many banks use their own models to judge default risks rather than relying on rating agencies. "That results in us paying financing conditions that are significantly better than those that should be found in our rating category," Gemkow said.
Lufthansa has a 'Ba1' credit rating at Moody's, a junk rating that is one step below investment grade, and a 'BBB-' rating at Standard and poor's, one notch above junk. An improvement in sales of premium airline tickets is boosting the long-haul flight sector. On European routes, a higher number of tickets sold is making up for sluggish yields.
But the short-haul segment is still suffering. In Germany, higher volumes are still failing to offset weak yields after a shift of passengers from the lucrative business class to cheaper economy class seats at the back of the plane.
"The hard winter, the pilot strikes and the closure of airspace due to the volcanic ash, has torn a hole (in the business) and we are now trying to climb out," Gemkow said. Last week, Germany's government, battling to find new ways of closing its budget gap, amended plans for raising 1 billion euros a year from a new tax on air passengers, increasing the levy on long-haul flights.
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