By Ilona Wissenbach and Edward Taylor
FRANKFURT (Reuters) - Lufthansa (DE:LHAG) shares jumped as much as 20% on Thursday after its top shareholder dropped his objections to a 9 billion euro ($10 billion) government bailout for the German airline brought to the brink of collapse by the COVID-19 pandemic.
"I will vote for the proposal," billionaire investor Heinz Hermann Thiele, who recently increased his stake in Lufthansa to 15.5%, told the Frankfurter Allgemeine daily on Wednesday.
His endorsement amounts to an 11th-hour reprieve for Germany's flagship airline after fears had swirled he might veto the proposed rescue, which will see the government take a 20% stake and board seats, diluting existing shareholdings.
Shareholders are due to vote on the plan later on Thursday at a meeting held online due to the pandemic.
Thiele's backing will come as a relief to Chancellor Angela Merkel, who could ill afford another high-profile business collapse following the failure of payments firm Wirecard.
Lufthansa, which traces its roots back almost a century, employs around 138,000 people and owns brands including Eurowings and Austrian Airlines.
It has been brought to its knees by COVID-19 and what promises to be a protracted travel slump, and like many rivals across the world, sought state help to stay afloat. Even after Thursday's gains, its shares are down almost 40% this year.
Also on Thursday, European Union regulators approved Lufthansa's bailout deal, subject to a ban on dividends, share buybacks and some acquisitions until state support is repaid.
At 1015 GMT, Lufthansa's stock was up around 14% at 10.18 euros, leading Germany's mid-cap MDAX index (MDAXI).
JOBS AT RISK
Concerned a government stake would make it harder for Lufthansa to make tough decisions about restructuring and job cuts, Thiele had instead proposed an indirect government holding in the airline via Germany's KfW development bank.
That sparked fears the bailout would fail and Lufthansa would have to seek protection from creditors within days.
Chief Executive Carsten Spohr said the German government did not plan to get involved in the operations of the airline.
"Everyone is aware that we are in a global competition. We need the tools to compete against American or Chinese airlines," Spohr told the Bild newspaper.
Thiele said talks with the government on Monday had not removed his doubts, but he could not have voted for insolvency. He said he would continue to seek to influence the company's development in the future, although declined to say how.
Thiele said it was in the interests of Lufthansa employees that management quickly negotiate restructuring with unions.
Up to 22,000 jobs could be at risk at the airline.
Spohr said he wanted to avoid job losses by cutting working time and salaries for all employees, suggesting hours and wages could be reduced by a fifth instead of axing a fifth of jobs.
Lufthansa struck a deal overnight with the UFO union representing German cabin crew that is set to reap more than 500 million euros in savings, including steps to stop pay rises, cut working hours, and a cap on pension contributions.
More talks are scheduled on Friday with services union Verdi.
