World News

Coronavirus halts Lufthansa’s sale of international catering ops

By Arno Schuetze

FRANKFURT (Reuters) – German carrier Lufthansa <LHAG.DE> has been forced by the coronavirus epidemic to halt the sale of the international operations of its airline caterer LSG, the company said on Thursday, confirming an earlier Reuters report.

Airlines around the globe are feeling the pain as travel demand withers because of the spread of the virus. Several have grounded many flights and ditched their financial outlooks.

European airline stocks plunged as much as 20% on Thursday after U.S. President Donald Trump said he would restrict travel from Europe to the United States for 30 days to try to contain the spread of the coronavirus.

The German government will meet representatives of airlines and labor unions on Monday to discuss the impact of the outbreak and possible liquidity aid.

Even before the epidemic began Lufthansa Chief Executive Carsten Spohr said the airline’s catering business faced challenges because of the large number of locations it serves, high staff costs and exposure to currency exchange rates.

However, Lufthansa managed to negotiate a deal to sell the European operations of LSG to Switzerland-based Gategroup, in December.

That deal is going ahead as planned, Lufthansa said.

The auction for the international business launched only weeks ago with information packages being sent out to prospective bidders, who were asked to sign confidentiality agreements, people close to the matter have said.

Lufthansa has been hoping to reap a valuation of roughly 1 billion euros ($1.11 billion) from a sale of the international catering operations to a peer such as Gategroup, Dnata, SATS or private equity firms, people close to the matter have said.

“Lufthansa has to wait until it can fly normally again and define the virus impact on the catering unit before continuing with the auction”, one of the people said.

A Lufthansa spokesman said the sale of the international LSG operations had been halted.

(Reporting by Arno Schuetze; Editing by Douglas Busvine, Thomas Escritt and Frances Kerry)