Germany plans to sell up to a quarter of its 20pc stake in Lufthansa over the coming weeks, the German finance agency said on Monday, citing positive developments at the bailed-out airline.

Lufthansa shares fell as much as 4.9pc to €8.81 in early trade after the announcement.

The state's 20pc stake was acquired for €300m as part of a bailout for the German carrier as the company and the entire aviation sector took a battering from the coronavirus crisis.

Lufthansa had received a €6bn package from Germany's economic stabilisation fund (WSF), which was set up to help companies to ride out the pandemic.

The WSF has said it would sell the complete stake, which is worth more than €1bn, before the end of 2023.

Lufthansa plans to issue new shares, probably before the September 26 parliamentary elections, to help it to return bailout money to taxpayers.

Shareholders have approved a potential capital increase of up to €5.5bn.

Earlier this month Lufthansa announced results and said recovering air travel and progress on cost savings helped it narrow its losses in the second quarter and record cash inflow for the first time since the start of the coronavirus crisis.

The group – which also owns Eurowings, Swiss, Brussels and Austrian Airlines – reported its adjusted operating loss narrowed to €952m from €1.7bn a year earlier, slightly below the forecast in a company-provided poll.

Lufthansa said the easing of travel curbs and pent-up demand drove significant recovery during the second quarter and together with cost savings, which included job cuts, helped stem the cash bleed and deliver a €340m cash inflow.

Rivals, including Air France-KLM and British Airways owner IAG also reported a return to positive cash flow in the second quarter of 2021.

In June Lufthansa laid out plans to return to profitability with fewer planes and staff than it had before the pandemic.

Reuters