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Coronavirus halts Lufthansa's sale of international catering operations: sources

Stock MarketsMar 12, 2020 11:28AM ET
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By Arno Schuetze

FRANKFURT (Reuters) - German carrier Lufthansa (DE:LHAG) has been forced by the coronavirus epidemic to halt the sale of the international operations of its airline caterer LSG, two people close to the matter said.

Airlines around the globe are feeling the pain as travel demand withers because of the coronavirus outbreak. 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 labour unions on Monday to discuss the impact of the coronavirus outbreak and possible liquidity aid.

Even before the pandemic broke out, Lufthansa Chief Executive Carsten Spohr said that 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, the sources said.

Lufthansa declined to comment.

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.

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.

Coronavirus halts Lufthansa's sale of international catering operations: sources
 

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