Lufthansa intends to sell shares of its MRO arm

The German airline Lufthansa has shown an interest in selling shares of the company’s MRO arm, Lufthansa Technik. The company’s Group chief executive Carsten Spohr told that part-sale of the MRO arm is a possibility in the future, but the group would remain the majority shareholder.

Spohr was speaking during quarterly results briefing on June 3. He said the company was considering offering shares of the technical division to the public even before the coronavirus crisis. But, this is just an option; another option under discussion is to merge parts of LHT with another entity.

The division has engine overhaul shops jointly owned by GE Aviation, Rolls-Royce, and MTU. It has also developed strong partnerships with Original Equipment Manufacturers (OEMs), which provide crucial products and services. Before the establishment of LHT, the company bought shares of Air China’s maintenance center Ameco.

The Group chief executive said that they are considering selling the shares of LHT or merging it with another party, but they won’t divest its entire shareholding, as the division means a lot to them. He said that all the ownership-change plans are now on hold due to the virus crisis and investing in the market wouldn’t be a wise thing to do. But, if the situation improves and they find a good divestment opportunity, they can offer shares to the public. He said, it’s better if the LHT is associated with the company as it adds value, but the options under consideration before corona would also be considered after the crisis.

LHT’s earnings before income and taxes during the first quarter in 2019 were €123 million, whereas, in 2020, it was only €4.5 million. The company says that the decline in income due to the travel restrictions is having a negative impact on LHT.

The company also agreed to sell the European catering business LSG to GateGroup in 2019, the deal was cleared but hasn’t been closed yet. It is also looking for the opportunity of divesting the catering operations, but the crisis has put this process on hold as well.