Germany

Germany will see a substantial increase in government debt as it spends its way out of the coronavirus crisis, with its debt-to-GDP ratio set to increase to 77 per cent from below 60 per cent currently, its finance minister said, the Financial Times reported. Olaf Scholz made the announcement on Wednesday as he presented a second supplementary budget for 2020 that envisages additional borrowing of €62.5bn. Added to the €156bn of new debt included in the first extra budget in March, that takes the total for this year to €218.5bn.

German airline Lufthansa, responding to investor criticism of a state-backed rescue deal, warned it might need to apply for protection from creditors if the bailout plan failed to win shareholder approval, Reuters reported. Lufthansa’s biggest shareholder, German billionaire Heinz Hermann Thiele, criticised the 9 billion euro ($10.1 billion) bailout, saying he had raised his stake in Lufthansa to over 15% and hoped alternative options could be explored.

German Finance Minister Olaf Scholz will ask parliament to increase new borrowing by a further 62.5 billion euros ($70.5 billion) to a record 218.5 billion this year for measures to boost recovery from the coronavirus pandemic, two people familiar with the plans said on Monday, Reuters reported. The plan, to be presented in Scholz’s second supplementary budget in three months, underlines Germany’s shift from Europe’s austerity champion to one of the biggest spenders in the euro zone’s efforts to rebound from the pandemic.

Four-time German champions Kaiserslautern announced Monday they have filed for insolvency, but the third division club is expected to survive under new rules adopted by the German FA this season due to the coronavirus pandemic, News24.com reported. Kaiserslautern last won the Bundesliga title in 1997-98, but they were relegated from the top-flight in 2011-12 and dropped to the third tier last season after finishing bottom of the second division.

German lead producer Weser-Metall GmbH has received interest from a “large number” of potential buyers and plans to start negotiations over a sale next month, the administrator for the insolvent firm said on Monday, Reuters reported. The Nordenham-based group, which is owned by French metals producer Recylex, is one of Europe’s main lead producers with output of about 105,000 tonnes annually. It filed for insolvency in May. It is currently working under self-administration, which means Recylex no longer has control of the company.

Deutsche Lufthansa AG’s Austrian Airlines division will shrink to 80% of the size it was before the coronavirus crisis, Chief Executive Officer Alexis von Hoensbroech said in an interview with the newspaper Der Standard, Bloomberg News reported. “From today’s perspective that would mean that we have 1,100 employees too many,” he said. “We are planning two years of short-hours work, so there can be no layoffs for that long,” but a large part of the planned reduction by 2022 will be through staff turnover, he added.

Deutsche Lufthansa AG revealed the full extent of potential job losses, saying cost cuts and moves to shrink the fleet will leave it with a surplus of 22,000 full-time positions, Bloomberg News reported. Europe’s biggest airline has begun talks with unions representing pilots, flight attendants and ground staff and aims to minimize the number of people dismissed by reducing working hours and other measures, it said in a statement. An agreement should be reached by June 22.

Deutsche Bank has warned its provisions for bad loans will surge to the highest level in more than a decade this quarter as the coronavirus crisis leaves the global economy mired in recession, the Financial Times reported. Germany’s biggest lender had earmarked a provision of just €506m for bad loans in the first three months of the year, but cautioned on Wednesday that the figure would increase this quarter.

German industrial production plunged by a record 18 per cent month on month in April, as the coronavirus lockdown caused major disruption to factories across most manufacturing sectors of Europe’s biggest economy, the Financial Times reported. The federal statistics agency said it was the biggest fall since its records began in 1991, underlining the heavy toll the pandemic crisis has taken on Europe’s industrial heartland. The vast German car industry was hit hardest. Its output collapsed to a quarter of its level the previous month.

Lufthansa has pledged a wide-ranging restructuring, from thousands of job cuts to asset sales, as it seeks to repay a 9 billion euro ($10.1 billion) state bailout and navigate deepening losses in the face of the coronavirus pandemic, Reuters reported. The pledged cost cuts came as the German carrier posted a first-quarter net loss of 2.1 billion euros on Wednesday, only days after securing the bailout that is intended to help the airline ride out the crisis but will require it to cede some of its prized landing slots to rivals. “In view of the very slow recovery in demand, we must