Hapag-Lloyd still on track for monies from German government

From Bloomberg News

Oct. 2 (Bloomberg) -- Hapag-Lloyd AG was cleared to receive German government loan guarantees as part of a 1.2 billion-euro ($1.7 billion) rescue package to help the country’s biggest container shipper counter the recession.

Federal aid was approved today by a panel of government officials led by the Berlin-based Economy Ministry, a ministry official said. The deal will be formally signed on Oct. 5 after the government answers residual questions raised by parliament’s budget committee about the aid package, the official said.

Hapag-Lloyd must cut costs

The German government is dictating to Hapag-Lloyd that they must drastically cut costs. $1.5 billion. It's a pity they haven't figured that out by now. Just as Obama had to fire some folks at GM, perhaps Merkel will need to do the same at Hapag-Lloyd.

No wonder Kuehne has been so unhappy with the management at Hapag-Lloyd.

From The Journal of Commerce

The shipping line, Germany’s biggest container fleet, filed for aid on Aug. 14. Hapag was advised by the federal government to modify the criteria for gaining aid to include providing more funds from its owners and starting a cost-cutting program to save as much as $1.5 billion.

Chancellor Angela Merkel’s coalition has tied help for banks tapping the country’s $699 billion bank rescue fund to restrictions on top executives’ pay and temporary restrictions on dividends, Bloomberg reported.

Annual pay for board members that exceeds $727,000 is “not appropriate”, according to an ordinance that followed the legislation.

And, what about all those ships on order? Huh?

These folks are going to end up bankrupt, just like GM.

UPDATE
From Bloomberg News

Oct. 1 (Bloomberg) -- German lawmakers suggested to the government to tie aid for shipping company Hapag-Lloyd AG to demands on the owners including TUI AG.

The government should explore if state guarantees for Hapag-Lloyd can be tied to demands such as a cap on executive pay and a dividend ban, according to a draft motion from today. The proposal will probably be decided today and brought in by the Social Democrats and the Christian Democrats, the two largest parties in the Bundestag.

Aid for Hapag-Lloyd delayed

From Reuters

BERLIN, Sept 30 (Reuters) - The German parliament's budget committee is delaying talks on state aid for container shipping company Hapag-Lloyd due to concerns from all parliamentary parties, sources familiar with the matter said on Wednesday.

It's all a big mystery.

Perhaps there is some concern this is not money well invested by the government.

I think there is reason to be concerned. Same as we have concerns in the U.S. about various bail-outs performed by our government.

Update 11:43 PM
Bloomberg has a more detailed article regarding the problem.
Apparently there is some concern exactly how the money will be spent. The term which was used was "opaque", which is of course, the opposite of "transparent", a term often used.

The petition for aid is “raises serious questions on where taxpayers’ money will be spent, and we need answers quick,” Juergen Koppelin, the Free Democrats’ budget spokesman, told reporters after the meeting. “Hapag has commissioned ships to be built in South Korea, there are plans to construct new buildings, and the list goes on.”

Yes, absolutely. Why do they still have those orders for new ships?

Just yesterday, CMA CGM figured out maybe they should be cancelling their orders - of course, this is because they have run out of cash.

Why should Hapag-Lloyd not be in the same position? Just because the government will give them the money?

click here for Bloomberg article

Hapag-Lloyd on track for government monies

Looks like things are falling in place for Hapag-Lloyd to get some money from the government.

They sure will need it.

From The Wall Street Journal (who picked this up from Dow Jones)

FRANKFURT (Dow Jones)--The German government's steering committee Monday signaled there will likely be a positive vote on state-backed guarantees for struggling shipping company Hapag-Lloyd AG (GD-HPL) of a total of EUR1.2 billion.

The German budget committee is still set to discuss the matter Wednesday.

Hapag-Lloyd is set to get 90% of the guarantees from the government's special Germany fund, the German economics ministry said in a statement.

The German federal and Hamburg governments will each provide half of the guarantees.

Hapag-Lloyd, which is 43.3% owned by TUI AG (TUI1.XE) and 56.7% by consortium Albert Ballin GmbH & Co. KG, applied for the state-backed guarantees in August.

The company's owners Monday declined to comment on the subject in detail.

The state guarantees must be examined by the European Union Commission, which said two weeks ago it is "in informal contact" with Germany about the issue.

-By Frankfurt Bureau, Dow Jones Newswires; +49 69 29725 500; djnews.frankfurt@dowjones.com