The movement of the largest shipping lines into the airfreight sector seems to have taken an unusual twist, with Klaus-Michael Kuehne increasing his holding in Lufthansa AG to become that airlines largest shareholder.
In a somewhat obscure filing to the Frankfurt Stock Exchange on the 6th July, Deutsche Lufthansa AG stated that Klaus Michael Kuehne had acquired at least 15% of the equity and voting rights of the company. The filing seems to state that previously he had held 10% of the company. It appears that Mr Kuehne is now the largest shareholder in Lufthansa, having overtaken the German government.
The value of the stake is considerable, at only slightly less than €1bn.
As is usual in German business culture, there is no public statement by Kuehne or Lufthansa on the reasons behind the purchase. However, it follows a series of investments by shipping lines in both airlines and aircraft. In particular MSC has made a joint bid for the Italian airline ITA with Lufthansa, and it seems MSC is leading the deal. In addition, CMA CGM and Maersk have made aggressive moves into airfreight with CMA CGM establishing a relationship with AirFranceKLM.
It is hard to be certain of Mr Kuehne perspective. As the controlling shareholder of Kuehne and Nagel, he must be aware that the movement of shipping lines into airfreight is a development with considerable implications for one of the largest airfreight forwarders. Alternatively, Kuehne may have a concern that Hapag Lloyd, the container shipping line in which he is also a leading shareholder, could be left behind by its rivals.
Lufthansa is hardly a safe investment. It is only just recovering from the effects of the COVID-19 crisis during which the German government had to effectively bail it, taking 14% of the equity of the company as well making €3.8bn of loans. These have been paid back and the German state is selling-down its equity holding, however the effects of the crisis has been a €2.2bn recapitalisation of Lufthansa largely through bonds issuance.
The container shipping sector benefitted from the developments of the past two years, whereas the airline sector is in crisis. The presently cash-rich shipping sector seems to be intent on exploiting this change of fortunes and is circling the troubled airline sector with the apparent intention of reshaping airfreight.
Source: Transport Intelligence, 12th July 2022
Author: Thomas Cullen