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Deutsche Lufthansa AG passenger aircraft at Teruel Airport in Teruel, Spain, on Monday, October 19, 2020. More than 8,100 planes sit idle around the world, or 31% of the global fleet, according to aviation database Cirium. (Photo: Paul Hanna/Bloomberg)

Lufthansa sells US$1.9-B bond to repay COVID bailout loan

Deutsche Lufthansa AG passenger aircraft at Teruel Airport in Teruel, Spain, on Monday, October 19, 2020. More than 8,100 planes sit idle around the world, or 31% of the global fleet, according to aviation database Cirium. (Photo: Paul Hanna/Bloomberg)

German carrier Deutsche Lufthansa AG sold €1.6 billion (US$1.92 billion) of bonds on Thursday to partly repay a government bailout that kept it afloat after the pandemic severely disrupted international travel.

Lufthansa will use €500 million to refinance financial liabilities due this year, and the rest of the funds will repay a €3-billion loan from State development bank KfW, the company said in an e-mailed statement.

KfW, the State ddevelopment bank of Germany (Photo: Global Business Outlook)

The KfW loan was part of a €9-billion rescue package from the German Government agreed in June after the pandemic, and associated collapse in passenger numbers, left the company reeling.

Airlines were among the hardest-hit sectors last year, with many forced to ground their fleets and Lufthansa was among several that lost highly-prized investment-grade credit ratings.

Lufthansa signage (Photo: Business Insider)

Raising debt to repay government loans could help Lufthansa avoid fire sales of assets that would fetch a higher price once the aviation market recovers from the coronavirus downturn in travel.

Chief executive Carsten Spohr has said he doesn’t expect a return to pre-crisis flying levels until 2024, feeding speculation the company might need to quickly sell or partially list its Lufthansa Technik maintenance division.

Carsten Spohr, CEO of Lufthansa AG (Photo: IATA)

The airline received more than 2.6 billion orders for its two-tranche bond, Bloomberg reported earlier. The 750 million euros of notes with a four-year maturity will pay a three per cent coupon, while the 850 million euros due in seven years will pay 3.875 per cent.