Greece is considering a capital injection of around 120 million euros for Aegean Airlines, the government said on Monday, adding that the nation’s biggest carrier was crucial to the tourist-reliant economy.
The news drove the carrier’s shares 7.35% lower on closing on Monday.
Under the plan, the government would receive warrants in exchange for providing funds for the privately owned Aegean Airlines, the government’s chief spokesman Stelios Petsas said.
Aegean shareholders would in addition provide another €60 million.
In the longer term, the state would get its money back as air transport provided “the wings that bring tourists to the country,” Petsas said.
“With the warrants the state will get, when recovery comes, the price of the shares will increase, meaning the state will get money back when this coronavirus adventure is over,” he said.
But analysts, explaining the share price fall, said more detail was needed.
“Lack of clarity on the specifics of the state aid, coupled with the sharp climb that started earlier this month, are the reasons for the loss of altitude today,” said an analyst who declined to be named.
Aegean’s 2019 balance sheet, the latest available data, showed the airline had total equity of €328.4 million, or 71.4 million shares outstanding.
Aegean, a member of the Star Alliance airline group, went into the red in the second quarter, reporting a net loss of €73.4 million after the pandemic forced the grounding of planes.
Its revenue fell 64% in the first half of 2020.
The warrants will give the government the right to buy shares in the airline at a set price over a specific time period.