Lufthansa cuts staff by 22,000

The announcement came after the company lost 1.5 billion euros (around 16 billion kroner) in the second quarter. Total loss after the first two quarters of the year is 3.62 billion euros.

– We are experiencing a marked disruption in global air traffic. We do not expect demand to return to pre-crisis levels until 2024, says the company’s top manager Carsten Spohr.

Like other airlines, Lufthansa has been hit very hard by the corona crisis. Travel restrictions have been introduced in many countries, and fears of infection dampen the demand for travel that can still be implemented.

Lufthansa states that turnover fell as much as 80 per cent in the second quarter, compared with the same period last year. The reason was that demand collapsed.

The only bright spot in the accounts is that Lufthansa Cargo delivers solid figures and contributes to the loss not being even greater.

Spohr warns that it will not be possible to avoid a comprehensive restructuring of the business in the wake of the crisis.

The group will cut costs by 15 percent by 2023 and reduce the fleet by at least 100 aircraft.


Lufthansa is negotiating to get 9 billion euros to save it

Source: FRANKFURT – Reuters

Lufthansa said it was negotiating with the German Economic Stabilization Fund to obtain nine billion euros ($ 9.71 billion) to save it, confirming the content of an earlier report from Reuters.

The airline stated that the “Stability Pack” includes a capital contribution that is free from voting rights, a guaranteed loan and an increase in the company’s capital, including what the government may own up to 25% plus one share.

“The Executive Board of Deutsche Lufthansa is continuing negotiations with the aim of ensuring the economic viability of the company in the future for the benefit of its customers and employees,” the company said in a statement to regulators.

She added that various alternatives to raising the capital are subject to discussion, including an increase in the nominal value of shares, if necessary after making a capital reduction.

The nominal value of Lufthansa share is 2.56 €. A 25% stake will cost less than 500 million euros at this price. And if Lufthansa reduces the capital, this will enable the country to buy 25% at a lower price.

Lufthansa shares closed 0.5% higher at 7.86 euros on Friday.

The cheap price of new shares issued in favor of the state will allow Germany to sell its stake quickly, with a profit realized once the Lufthansa situation stabilizes.


9 billion euros to save “Lufthansa”

The nominal value of Lufthansa share is 2.56 €. A 25 percent stake will cost less than 500 million euros at this price.

If Lufthansa cuts the capital, this would enable the country to purchase 25 percent at a lower price.

Lufthansa shares closed 0.5 percent higher at 7.86 euros today.

The cheap price of new shares issued in favor of the state will allow Germany to sell its stake quickly, with a profit realized once the Lufthansa situation stabilizes.


The airline stated that the “Stability Pack” includes a non-voting capital contribution, a secured loan and an increase in the company’s capital, which could include the government up to 25 percent plus one share.

“The Executive Board of Deutsche Lufthansa is continuing negotiations with the aim of ensuring the company’s economic viability in the future in the interests of its customers and employees,” the company said in a statement to regulators.

She added that various alternatives to raising the capital are subject to discussion, including increasing the nominal value of shares, if necessary, after a capital reduction.

The nominal value of Lufthansa share is 2.56 €. A 25 percent stake will cost less than 500 million euros at this price.

If Lufthansa cuts the capital, this would enable the country to purchase 25 percent at a lower price.

Lufthansa shares closed 0.5 percent higher at 7.86 euros today.

The cheap price of new shares issued in favor of the state will allow Germany to sell its stake quickly, with a profit realized once the Lufthansa situation stabilizes.


Disastrous economic data weigh on the Dax

Frankfurt The series historically poor economic datathat investors currently have to digest does not stop. That is also a burden for the German Leading index Dax. The stock market barometer closed on Friday 1.7 percent lower at 10,336 points.

“This drug had recently made a significant leap on the stock markets,” said Thomas Altmann, portfolio manager at QC Partners. “Therefore, this announcement is a clear warning to all euphoric investors.”

The puzzle is only slowly completing, how badly the corona pandemic is paralyzing the global economy. It was announced on Friday that the UK retail collapsed by more than four percent in March compared to the same period in the previous year – a decline that was not achieved even in the 2008 financial crisis.

Also in Japan the retail sector is idle: Merchants in the capital city of Tokyo reported a drop in sales of almost 35 percent in March. A similar decline to this extent is not to be found in the Bloomberg financial services time series.

There were also bad numbers from industry on Friday: The European commercial vehicle market fell almost half in March due to the coronavirus pandemic. With 105,196 vehicles, 47.3 percent fewer were registered than in the same month last year, the responsible industry association Acea announced on Friday in Brussels.

The number of registrations had already declined in January and February, but the decline in March was again considerably greater. The falls were most pronounced in the countries particularly hard hit by the Covid 19 pandemic: Italy (minus 66.1 percent), Spain (minus 64.4 percent) and France (minus 63.1 percent).

The managers surveyed by the Ifo Institute also assessed their situation as worse and are also more skeptical about the future. The published on Friday Ifo business climate index for April fell more clearly than expected: from 85.9 points in March to 74.3 points. That’s the lowest value ever measured. Economists interviewed by the Reuters news agency had expected a drop to 80.0 points. “The mood among German companies is catastrophic,” said Ifo President Clemens Fuest.

On Thursday, the GfK consumption barometer in Germany and the purchasing manager indices for the European service sector signaled that Germany and Europe were heading for a severe recession. The European Union is steering because of the corona crisis, according to EU Industry Commissioner Thierry Breton towards a drop in economic output of five to ten percent.

In addition, investors are also looking at the Federal Chancellor. Angela Merkel consults with representatives of business and trade unions on the corona crisis. This could also involve possible further easing and economic policy measures.

Look at the individual values

Deutsche Bank and Commerzbank: The rating agency Standard & Poor’s (S&P) has given it a thumbs-up because of the economic impact of the corona crisis at Commerzbank, Deutsche Bank and other German financial institutions. In the Commerzbank S&P downgraded the credit rating by one grade to “BBB +”, the outlook remains “negative”, as the credit rating officers announced on Thursday.

At Deutsche Bank, S&P confirmed the rating of the creditworthiness with “BBB +”, but lowered the outlook to “negative” from “stable”. While the creditworthiness guards doubt that Commerzbank can implement its new strategy “Commerzbank 5.0”, including the planned sale of the Polish subsidiary M-Bank, as planned, they see the restructuring of Deutsche Bank basically on track. The shares of the two largest German financial institutions fell by 6.8 percent (Deutsche Bank) and 4.1 percent (Commerzbank) and were among the biggest losers on the stock market on Friday.

Lufthansa: Down eight percent it went for the papers from Germany’s largest airline. So that leads Lufthansa the Dax’s list of losers. At € 7.20, the shares cost less than they had since the Sars pandemic 17 years ago. According to insiders, the airline plans to put together a government aid package of up to ten billion euros early next week. The loss increased to EUR 1.2 billion in the first quarter. Due to the pandemic, air traffic in Germany is almost completely stopped.

Nestlé: The Swiss food giant, on the other hand, is doing very well. Nestle accelerated its growth in the starting quarter 2020. Organic sales growth in the first three months was 4.3 percent, as Nestle announced on Friday. The share rose 1.8 percent. As the full impact of the Covid 19 pandemic could not yet be assessed, Nestle is tentatively sticking to the original outlook for 2020 as a whole. The Group expects organic sales growth and the underlying operating profit margin to improve.

Sanofi: The French pharmaceutical company benefits from the strong demand for painkillers and antipyretic due to the spread of the coronavirus. In the first quarter, currency-adjusted profit rose by 16.1 percent to 2.04 billion euros Sanofi announced. Sales climbed 6.6 percent to EUR 8.97 billion. Around half of the profit and sales growth is due to the corona pandemic. The corona effect will subside in the course of the second quarter. Sanofi confirmed the forecast for 2020. The group has set itself a five percent increase in earnings per share. The papers climbed 1.9 percent.

Eni: The Italian oil company the corona pandemic and collapsing oil prices drove a billion dollar loss in the first quarter. The net loss was 2.9 billion euros, as the Italian company announced on Friday in Rome. Had in the previous year Eni earned just under 1.1 billion euros. For example, Eni had to adjust the book value of its oil inventories to falling market prices, as well as depreciation on oil and gas activities. Adjusted, Eni achieved a small plus of 59 million euros, a fraction of the previous year’s profit of 992 million euros. Revenues plummeted by a quarter to around 13.9 billion euros. The stock lost 2.9 percent.

Look at other asset classes

Oil prices continued their recovery from the previous day on Friday despite the price losses in the meantime. The decisive factor on Wednesday, however, was not the easing of weakness in demand and excess supply, rather political tensions between the USA and Iran caused rising risk premiums for crude oil. In Asian trade, a barrel (159 liters) of the North Sea type Brent last cost $ 21.57, up 1.1 percent. The US WTI was traded at $ 17.09 per barrel, up 3.5 percent.

The euro exchange rate rose slightly on Friday. The European common currency was trading at $ 1.0804 in the late afternoon. The European Central Bank (ECB) set the reference rate on Friday at $ 1.0800 (Thursday: 1.0772).

Italy’s central bank Market insiders broadened their purchases of domestic government bonds on behalf of the ECB on Friday. The Banca d’Italia is buying slightly more titles on average than in the past few days, said a primary trader. A second insider said that she was more active on the market. Yields on ten-year bonds fell around ten basis points over the course of the day to 1.899 percent. They had previously climbed above the two percent mark when disappointment over the results of the EU summit on Thursday spread on the bond market.

With agency material.

Here is the page with the DAX course, here is the current tops & flops in the Dax. Current Short sales of investors can be found in our Short sales database.

“When planning wealth, the rule is: never get out completely!”


False incentives, fraud, debt: the side effects of the corona crisis

The Chancellor is in top form in times of corona crisis. Angela Merkel explains complicated population doubling rates and reproductive numbers. But she also knows everyday things. “They have to be washed or ironed regularly, put in the oven or in the microwave,” Merkel explains how to care for respiratory masks. “Even if that sounds a bit housewife, so to speak.”

The omniscient state – embodied in the chancellor. The subjects are explained life down to the smallest detail. With this self-image, Merkel takes “measures that have never existed in our country before”. Fundamental rights are restricted, the economy is pushed to the brink and then supported with unprecedented aid.

One of Merkel’s closest confidants, Peter Altmaier, is more than enthusiastic. “An uncle who brings something is better than an aunt who plays the piano”, the Federal Minister of Economics remembers of his childhood.

And what is brought along! If you add up everything the federal government now wants to offer to combat the corona crisis, you get a gigantic sum of at least 1.2 trillion euros. No other country in the world has raised so much money in relation to its economic strength.

Germany has a full 35 percent, far more than the EU average or the USA. Federal finance minister Olaf Scholz did not understate what he promised a few weeks ago: “It is not spilled, but padding.”


The increase in importance and power is unique. Never in the history of the Federal Republic has a government intervened so quickly and deeply in public life and thus in the economy. After the financial crisis, German government debt rose by 315 billion euros in one year. The value of the federal, state and local governments will be far exceeded in this crisis. “I am worried whether we will be able to return to normal economic policy,” says Lars Feld, Germany’s top economy.

The measures to protect health are understandable. But the question increasingly arises: what side effects do the multi-billion dollar rescue programs have? The free market is disturbed, competition is distorted, prices lose their signal strength.

“As much market as possible, as much state as necessary”, the famous words of former Federal Minister of Economics Karl Schiller lose their meaning every day.

There is a risk of higher prices, inefficient companies and loss of wealth. It is significant that more and more companies are turning to the Bundeskartellamt during the corona crisis in order to be exempted from cooperating with competitors. The new spirit of state economy speaks.

Spend as much as you can. The year 2020 will be disastrous. Kristalina Georgiewa (IMF chief)

Certainly, help for companies with no fault of their own must be provided. But with the flood of support funds, the risk of misallocation is high. Capital and labor are tied up in companies with below-average productivity, less investment and innovative strength.

A few weeks ago, after a parliamentary request from the FDP for possible support from zombie companies, the Federal Ministry of Finance had to admit that “necessary market processes of creative destruction are hindered”.

The concern is justified that the state is eating itself too deeply into the economy, throwing privacy and data protection partially overboard and that the influence on the market will not be reversed after the end of the crisis.

A look at history suggests little good. The federal government is still 25 years after the IPO Deutsche Telekom still the largest single shareholder.

Fundamentally, there is a problem that is known in the economy as moral hazard: companies and citizens behave irresponsibly or carelessly due to existing false incentives. The news of fraudsters sneaking up subsidies is increasing.

“The state is a lousy entrepreneur”

The appearances of Altmaier and Scholz are characterized by superlatives. At the federal press conference, they will be presenting the rescue packages worth billions to the public with great regularity. “This is the most comprehensive and effective guarantee that there has ever been in a crisis,” said Altmaier in mid-March. “This is the bazooka, we’ll look for small arms later,” the Federal Minister of Finance said at the appearance.

The small arms that have now been added are quite large-caliber. Scholz announced a debt-financed supplementary budget of 156 billion euros. This includes an emergency fund with a volume of 50 billion euros, which is aimed at the self-employed and small businesses with up to ten employees.

The federal guarantee for the state bank KfW is increased by up to 450 billion euros. And then there is an Economic Stabilization Fund (WSF) with a volume of 600 billion euros. The majority is earmarked for government guarantees to keep companies liquid.

100 billion euros are reserved for possible investments, i.e. partial nationalization of companies. The battered Lufthansa is already holding talks about state participation.

You can still hear Altmaier’s words: “The state is a lousy entrepreneur.” The Federal Minister of Economics at least dedicated the most beautiful hall in the ministry to Ludwig Erhard. But he is currently just as far away from Erhard’s mantra as the Germans are from summer leaves in Mallorca.

Minister of Economics Peter Altmaier (standing) and Minister of Finance Olaf Scholz (front)

The father of the “German economic miracle” throbbed to measure, he remembered sentences, the state should not be a player, but an arbitrator in the economy. Now the state is preparing to take over the entire football club.

No other industrial country is helping its economy with such large sums as the Federal Republic. This shows a new evaluation by the International Monetary Fund (IMF). He does not criticize Germany, on the contrary. “Spend as much as you can,” advises IMF chief Kristalina Georgiewa. The economic situation is too depressing.

The Council of Experts is now assuming that the economy will decline by more than 5.5 percent this year. This is the case that was previously treated as a worst-case scenario. The economic downturn would be worse than in the global financial crisis. 725,000 companies have registered financial difficulties and short-time work.

Including: hospitals. Health Minister Jens Spahn ordered them at the beginning of March to postpone all planned operations. For the hospital operator, this means severe revenue losses. More than a third of the intensive care beds are not occupied. With the Hospital Relief Act, the federal government created a regulation to compensate the clinics for the failures. But that’s far from enough.

This is the bazooka, we’ll look at small arms later. Olaf Scholz (Federal Minister of Finance)

Some private organizations have registered short-time work, including the Schön-Klinik group. The head of the German Hospital Society, Gerald Gaß, sees the time for a “careful, gradual resumption of regular care”.

Spahn also said last week that clinics could “gradually return to normal”. “We do not want to keep 40 percent of the intensive care ventilation beds in Germany permanently”, said the minister.

The pressure on the companies is huge, the need for help is great. This year alone, the federal government is raising 156 billion euros in new debt. The federal states are also preparing an extensive flood of money for pumps.

According to a survey by the Handelsblatt newspaper among the 16 state finance ministries, they are currently planning 65 billion euros in new debt to fight the crisis. In addition to the federal government’s huge € 1.2 trillion rescue package, the federal states are also helping their companies and the self-employed. Bavaria alone has launched a fund with 60 billion euros.

The IMF chief not only welcomes the gigantic aid package in Germany, the monetary fund also calls for thorough control. “Keep the bills,” said Georgiewa. Transparency and accountability should not be put off in the face of the crisis. Whether Germany is world champion in this discipline, doubts are increasing.

Risk zombie company

The financial crisis shaped a saying by the former head of central bank in Europe, Mario Draghi: “What ever it takes”. In this crisis, it becomes a “Whatever, take it!” Aid is mostly spent without checking, the money cannot be distributed quickly enough.

According to an overview by the Ministry of Finance and the Ministry of Economics, over 26 billion euros were applied for by KfW Hilfen. Almost 13,000 of the more than 13,200 applications were approved. In other words, almost anyone who wants help gets it, most likely companies that didn’t have a working business model before the pandemic.

This easily creates zombie companies that are only alive because of generous state aid. After all: With the large sums, the KfW steering committee seems to be examining it more closely. So far, around 8.5 billion euros have been approved. So it takes a little longer for the large-volume applications.

In contrast, the self-employed and small businesses with up to ten employees are suspiciously fast. So far, according to the overview of 1.65 million applications, around 1.1 million have been approved and more than nine billion euros paid out. These are not loans, but aid that does not have to be repaid.

“Speed ​​and thoroughness go hand in hand: it is carefully checked who receives the money,” Finance Minister Scholz promised. But is that true? North Rhine-Westphalia and Berlin were even recently forced to suspend immediate payments because large-scale fraudsters wanted to get to the pots.

There are also problems with honest entrepreneurs. In North Rhine-Westphalia, for example, the self-employed and small businesses are always granted the maximum amounts of EUR 9,000 and EUR 15,000 – regardless of need. This practice is not well understood in the Federal Ministry of Economics. Because a flat-rate payment of maximum amounts was actually not intended.

The aid should amount to up to 9,000 euros for companies with up to five employees and up to 15,000 euros for up to ten employees. The emphasis here is on the “up to”. According to the Ministry of Economic Affairs, the actual amount should be based on sales and operating expenses for the next three months. An entrepreneur with zero euros turnover and 1000 euros costs would be entitled to 3000 euros in emergency aid.

But these details were lost somewhere in the confusion between the federal states and the federal states. The up to 50 billion euros are provided by the federal government. Although federal money is at stake, it is up to the federal states how much they scrutinize companies. In Hamburg, for example, a liquidity check is required. Other countries are significantly less strict so that aid can flow as quickly as possible.

In Berlin, more than a billion euros were paid out to solo and small entrepreneurs within days. And the Berlin Senate also admits behind the scenes that surely there are also deadweight effects. Since no examination was carried out, almost everyone received 14,000 euros in a combination of federal and state funds. These include the self-employed, who normally have annual sales that are significantly lower, they say.

Some recipients are now voluntarily repaying the aid for fear of sanctions. But whether a subsequent thorough examination is possible to convince fraudsters is skeptical in financial management.

Dangerous false incentives

The economic nonsense, which is operated partly in the name of Corona, is great. Governments in the federal and state governments are increasingly creating the illusion that they can regulate everything with state trillions. And more and more, government intervention and expansion is creating false incentives in all areas of the economy, which can be revenged bitterly.

Take the housing market as an example: the Federal Minister of Justice, a woman from the SPD, wanted to protect the tenants. The result is a half-baked law that gets small landlords into trouble. The law was so badly made that solvent companies like Adidas or Deichmann used the gaps and simply suspended the rent payments. Only after a storm of indignation did Adidas row back.

Take the example of KfW loans: After the institutes hesitated to pass on the subsidized loans from the Staatsbank KfW to companies because they still had to bear ten percent of the default risk, the state assumed full liability. With the danger that house banks will now be able to provide loans to companies that have long been bankrupt.

The banks don’t care, they are released from any liability, but of course they still make good money from their business. The fool is the taxpayer who has to answer for the defaults.

Example of short-time work: Short-time work allowance is a tried and tested crisis instrument. The state replaces up to 67 percent of net wages. However, the SPD was not enough. In the coalition committee on Wednesday, she pushed for an increase to 80 percent.

It is the most comprehensive and effective guarantee that there has ever been in a crisis. Peter Altmaier (Federal Minister of Economics)

However, a general increase would have significant deadweight effects: Many companies are already increasing short-time benefits from their own resources. Apart from that, the short-time work allowance is not meant to secure the standard of living, but rather to ensure the survival of companies and thus avoid unemployment.

In other areas, the federal corona strategy is rather arbitrary. The craft complained that the vehicle registration offices were closed. There is also much discussion about opening shops up to the limit of 800 square meters. This border was communicated at least improperly and caused confusion and indignation among the shopkeepers.

Now a Hamburg administrative court has declared the 800 square meter rule to be illegal. The court could not understand why opening larger sales areas alone should attract more people to the city center. Necessary infection protection measures could be followed at least as well in larger stores as in smaller facilities.

Whimsical and impractical was initially the requirement that repair shops were allowed to remain open, but the sales rooms had to be closed. Many craftsmen wondered if they could lead the customers through the sales room into the workshop. Another detail from this series of undesirable side effects of the rescue policy.

The border closures, for example with the Czech Republic, mean that the bricklayers are missing in the construction industry and the harvest workers in agriculture from Romania. The state decides a lot, but the consequences are borne by the entrepreneurs and their employees.

The argument for the state’s rapid generosity in the crisis is: rather spend more now to prevent the economy from crashing and millions of jobs be lost than have to finance mass unemployment for a long time. This approach is absolutely correct. But it also remains true: somehow the state rescue billions have to be financed at least in the medium term if the next generations are not to be overwhelmed.

Currently this is done through the use of reserves and debts. Germany certainly has scope. The Federal Republic had just pushed the debt level to below 60 percent, thereby meeting the Maastricht criteria for the first time in many years in 2019. But that will be the last time for a long time.

As a result of the corona crisis, the federal government expects a general government deficit of 7.25 percent of gross domestic product (GDP) this year. The debt ratio as a share of all debts in GDP is estimated at 75.25 percent, as can be seen from the German Stability Program 2020.

“The projection is currently subject to very high levels of uncertainty,” says the current report. In other words, the debt level could be even higher. This mainly depends on how high the losses are that the federal government will incur from its guarantees and sureties.

Given the huge commitments, some in the grand coalition are trying to put the brakes on. “I don’t like the fact that we almost always get new suggestions every hour, what else can you do,” said Union leader Ralph Brinkhaus. “All of this must also be paid for.”

In a crisis, the state’s money is loose. Some sense their chance to finally implement long-held plans.


Economy warns of exaggeration in the fight against Corona

Dusseldorf The Chairman of the Council of Experts, Lars Feld, urges the Federal Government to take measures to fight the corona crisis. “Above all, what is currently being discussed is problematic. You get the impression that every industry wants specific support, ”Feld told the Handelsblatt.

The hospitality industry wants the reduced VAT rate that has now been decided. The auto industry is again asking for a scrappage premium, and retailing vouchers, says Feld. “You could go on almost any way – who doesn’t have one yet, who wants to do it again.”

“If you go this route, you will hardly be able to catch it afterwards in terms of fiscal policy,” warns the head of the Freiburg Walter Eucken Institute. This applies “also to social policy measures such as the increase in short-time work benefits or the extension of the duration of unemployment benefits”. “I’m more worried about whether we will be able to return to normal economic policy,” says Feld.

The economist also disapproves of the federal government’s policy on industrial policy: “If Corona is now used to quietly implement questionable industrial policy goals, I find that unacceptable.”

Specifically, it refers to the recent tightening of the Foreign Trade and Payments Act. “The goal of building a fortress Europe is definitely the wrong way to go,” said Feld. Germany in particular, as the largest economy, must speak out for openness. “We cannot leave the Dutch alone to stand up for a market economy policy,” he warns.

He expressly warns against the introduction of a property tax. “To talk about a property tax in this situation is insane. The best way to pay off the debt is with an intelligent growth strategy, ”said Feld.

Read the full interview here:

Mr. Feld, you are considered the nation’s regulatory conscience. The state experiences something of self-empowerment in corona times. What scares you more: the virus or the political measures against it?
“Fear” is the wrong expression in both respects. I know the medical problems abstractly, but I don’t feel any threat. Of course, this can change quickly if I experience illnesses in my personal environment. This is often the case. As far as the state measures in the fight against the crisis are concerned, I am not afraid either, I am more concerned that we will be able to return to normal economic policy.

The state intervenes massively in contract law, it relaxes bankruptcy law, it communitises risks. In your opinion, is that all still proportionate?
Overall, I think the aid package is proportionate. You can argue about individual measures, especially with tenancy law. However, one has to say that the state there has been massively interfering with freedom of contract for a long time: through the rent brake or the rent cover in Berlin, which is probably unconstitutional. I criticized that before Corona – and I’m also criticizing it now.

So you don’t see a new quality of state intervention?
But, above all, what is currently being discussed is problematic. One has the impression that each branch wants specific support. The hospitality industry wants the reduced VAT rate that has now been decided. The auto industry is again asking for a scrappage premium, and retailers are demanding consumer vouchers. This could be continued almost indefinitely: Who has not yet, who wants again?

If you go this route, you will hardly be able to catch it afterwards in terms of fiscal policy. Ultimately, this also applies to social policy measures such as raising short-time working benefits or extending the duration of unemployment benefits.

The current bailout package is well over a trillion euros, i.e. more than three times the federal budget – these are sums that recently seemed unthinkable. Will the state’s calculation work, so now to save jobs, will it cost what it wants? Otherwise, the state would have to pay for the millions of unemployed anyway …
Yes, the sums are big. However, many simply add up everything that is put in the shop window – loans, grants, guarantees and guarantees. You have to take into account that not everything has an impact on expenditure, loans are repaid and guarantees are not drawn. The decisive factor is whether the measures are targeted.

Where do you see the debt ratio in the medium term?
By the end of 2021, we will probably be back to around 80 percent of economic output, roughly the level we had at the end of the financial crisis.

Do you think politics and science still have an overview? When was it that the state had to keep thousands of companies alive – and probably for months?
I don’t think the state will be able to maintain this for months. It can mitigate the consequences, but it will not be able to save all companies and jobs. We will have bankruptcies. Ultimately, it’s about helping companies that have a viable business model over this cliff. It should not be forgotten that companies are in this situation because the state massively restricts our freedoms during the pandemic. If there were a claim for compensation from the state, the whole thing would be more expensive.

Who pays the bill in the end? There is already debate about balancing the burden …
There is, of course, this debate, but it is a harmful one, with a particular focus on the ideological interests of the parties. To talk about a wealth tax in this situation is insane. The best way to pay off your debt is to use a smart growth strategy.

What do you think of the fact that the private banks are now providing KfW loans with a volume of up to 800.000 euros no longer have to assume any liability, so get a 100 percent guarantee from the state?
If you bear in mind the Federal Government’s goal of mitigating corona-related defaults with liquidity aid, that makes perfect sense. Of course, it is cleaner from a regulatory perspective to take the banks at risk. But then the measure would not work. Even with a liability of only ten percent, banks are very hesitant to grant loans in this difficult situation. Of course, we cannot grant such KfW loans on a permanent basis.

We cannot leave the Dutch alone to stand up for a market economy policy.

But isn’t that a disguised bank bailout program?
I would not say that. It dissolves the risk aversion of privately liable bank executives. Ultimately, credit-based liquidity support is hardly an option for many companies currently affected, provided they would become excessively in debt.

Another instrument that is often mentioned is government participation. Will it happen?
I cannot imagine that we can do without state participation in certain industries – for example, with airlines. Until the Lufthansa back to pre-crisis levels, it may take a long time. The decisive factor is whether they are silent participations or whether the state wants to exercise control rights. I prefer the former because with a stock package it usually takes longer for the state to withdraw.

The bank bailouts during the financial crisis in the USA are always considered exemplary, although there were equity investments …
Yes, that’s right, but the state quickly withdrew there. The following applies: If the control function, then please use the exit scenario.

They probably refer to Commerzbank, where the state is still involved after more than ten years.
Yes, it would be even more serious with massive industrial holdings like we used to have.

Now there was a trend towards industrial policy even before the corona crisis. The economics minister tightened the foreign trade law – and added again during the corona crisis: are we experiencing a turnaround?
Unfortunately, there is a turnaround. If Corona is now being used to quietly push through questionable industrial policy goals, I find it unacceptable.

Now this policy is being carried out by the CDU-led Ministry of Economic Affairs. Are we threatened by French conditions?
The goal of building a fortress Europe is definitely the wrong way to go. Germany in particular, as the largest economy, must speak out for openness. We cannot leave the Dutch alone to stand up for a market economy policy.

Isn’t there a good reason to protect some industries – when it comes to security, for example in the case of the Chinese network supplier Huawei?
Of course, the state has to look when a state investor from China is investing in critical infrastructure. But now that doesn’t just apply to China. American investors are now being looked at just as critically. A systematic foreclosure strategy threatens. What is considered “safety-relevant” must therefore be clearly defined.

The law speaks of an “expected impairment” of public order or security. There seem to be no limits to arbitrariness, right?
The Ministry of Economy is now keeping everything open to prevent any takeovers. The whole thing is also enriched with a participation facility and the economic stabilization fund. It is a very unfortunate combination.

Even mouth protection and protective clothing are considered to be safety-relevant. They may be relevant to health, but they do not have to be produced in Germany. In this case, the state must create strategic reserves.

Back to the economic risks again. If the lockdown has such devastating consequences in Germany, what about countries like Spain and Italy that are already heavily indebted?
There is no way around these countries pursuing an expansionary fiscal policy and driving up debt levels. There is no alternative in the face of this great crisis.

Aid programs such as those in Germany cannot be afforded by these countries, which have been hit much harder by the corona crisis …
I wouldn’t say that in general. Spain and France have enough leeway with a debt ratio of 100 percent. I think 120 percent would be possible without them being in the focus of the financial markets.

Italy, which has a debt ratio of almost 140 percent, financial market players have long had their sights on them. Only thanks to the massive intervention of the ECB has interest rates dropped to a tolerable level again …
Yes, Italy is the real problem. The government debt there is moving towards Greek dimensions in terms of economic performance – and this is about a G7 country.

As far as the corona pandemic is concerned, Italy is not in debt to this crisis. Regulatory policy or not: Do you understand Italy’s prime minister, who vehemently demands the solidarity of the strong countries?
I differentiate between understanding and acceptance. I understand that Italy needs support given the many deaths. And I understand that the Italians are now doing everything they can to protect themselves against possible distortions in the financial markets with external help. What I cannot accept is Premier Conte’s blackmail strategy, which is unique in its sharpness.

Isn’t this attitude due to sheer misery?
That may be the case, but the extortionate approach could end up being counterproductive. The government cannot credibly threaten to exit the euro because the economy would collapse completely.

But the Italians know very well that an exit from Italy would very quickly result in a collapse of the monetary union, which the rest of Europe can hardly afford …
This may be. Nevertheless, Conte’s strategy is questionable because Italy would suffer much more. In Italy, therefore, there is rightly a debate as to whether the prime minister does not overdraw. Italy is well supplied with the funds that have been made available – i.e. the scarcely conditioned loans from the ESM rescue fund with the possibility for the ECB to buy unlimited government bonds (OMT).

I reject joint and several liability. That would be a fall for me.

Italy insists on corona bonds, i.e. the joint borrowing for this crisis. Wouldn’t that be an important symbolic signal for Europe’s cohesion?
No, I’m completely the politician of order. I reject joint and several liability. That would be a fall for me.

But isn’t it the more honest way in the end? A communitization of risks has long been taking place through the ECB’s balance sheet, an institution that is not at all legitimized for such a redistribution policy …
Again, joint and several liability between states is out of the question for me. Other forms of joint liability, such as joint liability or guarantees for debt, can be discussed.

Discussions about a fund at EU level – possibly parallel to the ESM – that is financed by bonds guaranteed by member states and from which transfers are paid – all of this is conceivable. The problem with joint and several liability: Here the creditor can pick out the most solvent country – and force it to be repaid.

The crisis could hit the emerging markets even more severely than Italy. We are obviously experiencing a crisis of a whole new dimension. Not only almost all industries are affected, but also all regions of the world – at the same time. Some already compare the economic consequences with the Great Depression in the 1930s. Do you think this is alarmist?
No, I don’t think it’s alarmist. There are parallels as to the dimension of the economic downturn; but not on the job market. In addition, the reasons are completely different. The current crisis cannot be compared with the Spanish flu either. At that time after the First World War, the economies were very weak.

The fact is: A crisis as we are now experiencing it is unique. It is not only the slump in the economy as a result of the lockdown, but also the interruption of the international supply chains.

How do you explain that the markets are still reacting almost moderately?
The markets are still assuming that the gigantic rescue packages will help to overcome the liquidity problems. Whether this will really be the case depends on the further development of the pandemic. I would therefore not rule out further slumps in the financial markets.

The Ifo Institute anticipates a 20 percent drop in GDP in the worst scenario. Do you think such a scenario is conceivable?
I’m not that pessimistic. The 20 percent of the Ifo Institute is an annual projection, not an annualized quarter. This means that the relatively robust first quarter is included, so that the economy would not get on its feet in the third and fourth quarters.

At the moment, almost all countries except Sweden are pursuing the same corona strategy: lockdown, bans on contacts and so on. There has never been an experiment like this. Could this strategy turn out to be a global mistake in the end?
Afterwards we’ll be smarter. Yes, there are voices that can be taken seriously and say that we unnecessarily stall the economy. Only: If we look at the infection curves and compare them with other flu waves, we see that the rise at Corona is much steeper. If we let it go, significantly more deaths would be unavoidable. So I think trying to flatten the curve so as not to overload the health system is the right strategy.

Finally, a personal question: It was not long ago that your colleague Peter Bofinger from Würzburg was the last Keynesian. But now conservative economists are also calling for massive government intervention. Ifo boss Clemens Fuest, for example, or IW boss Michael Hüther, who most recently spoke in favor of corona bonds. Do you sometimes feel like the last politician in the country?
Do not worry. There are still a large number of economists who think in terms of regulatory policy. In addition, I am just as pragmatic as my colleagues in this unique crisis that we are currently experiencing.

Mr. Feld, thank you very much for the interview.

More: EU summit: These are ideas for financing the EU reconstruction funds


Sahin and Türeci are developing a vaccine

Mainz Ugur Sahin and Özlem Türeci do not currently have much time for their private lives. The focus of the two doctors is their company. Your mission: the fight against Covid-19.

That seems to be paying off: the stock listed on the US technology exchange Nasdaq gained almost 50 percent overnight. With currently around $ 12 billion, Biontech is worth almost three times as much as the one stumbling in the pandemic Lufthansa.

Together with the US pharmaceutical company Pfizer and the Chinese company Fosun, both of which have a minor stake in Biontech, are now expected to break through in the corona crisis.

Mainz has been researching an influenza vaccine with Pfizer for a long time. Nevertheless, vaccines against infectious diseases have so far been a minor issue. The company that Sahin founded in 2008 with the immunologist Christoph Huber specializes in individualized cancer therapies. The goal: to activate defense reactions against tumors in cells.

The pandemic shows: Sahin and Türeci are not bogged down in technology. When they first heard about the virus, they were convinced that they could contribute to the fight against Covid-19. 400 of the 1300 employees are now working around the clock on vaccine development, in three shifts, as the “Manager Magazin” wrote.

Biontech expects interim results at the end of June. If the first study is successful, a larger test run could begin in autumn. But Sahin curbs the euphoria: he does not believe that the vaccine will be approved before 2021. Nevertheless, that would be a record pace: New vaccine developments would otherwise take decades. It is not without reason that the project bears the name “Lightspeed”.

Scientist at heart

Despite his leading role, Sahin sees himself primarily as a scientist and continues to teach as a professor of experimental oncology at Mainz University. “We are a technology company, not a classic pharmaceutical company,” he once said. “Our success depends on what we do technologically and medically work.”

Sahin who liked his company with the electric car maker Tesla compares, is viewed in the oncologist community and received the “German Cancer Award” in 2019 for its research. Sahin comes from southern Turkey and received her doctorate in Cologne in 1990. Türeci’s family comes from Istanbul, the father worked as a country doctor in Lower Saxony. The two met in Saarland, at the University of Homburg.

Türeci founded her first company with other partners in 2001: Ganymed Pharmaceuticals. In 2016, the Japanese pharmaceutical company Astellas bought the company for 422 million euros – the largest deal to date in the still young German biotech industry. Ganymed developed antibodies for targeted cancer therapies.

Biontech also includes the Hexal founders and investors Andreas and Thomas Strüngmann. Your family office owns half of the shares. Bill Gates also invested. Sahin himself holds a good fifth of the shares. This makes him the second largest shareholder after Strüngmanns. On paper, Sahin is now worth more than two billion euros.

That shouldn’t mean much to him. “Sahin has never put monetization in the foreground,” said Thomas Strüngmann in an interview with Handelsblatt last year. “His dream coincides with ours to build something sustainable, permanent and to develop fundamentally new, better therapies.” Sahin and Türeci are “exceptional phenomena” with what scientific foundations they have created for the company – “and with what passion push it forward ”.

More: New technologies are stirring up the vaccine market


Lufthansa makes a loss of 1.2 billion euros in the corona crisis

Lufthansa jets

The group has radically cut down its flight schedule.

(Photo: dpa)

Frankfurt The Lufthansa posted an operating loss (adjusted EBIT) of 1.2 billion euros in the first quarter, primarily due to the effects of the corona pandemic. The company announced on late Thursday afternoon. In the same period last year, the largest German airline had posted a loss of 336 million euros. Many airlines are in the red in the first quarter.

Consolidated sales in the first quarter fell on a preliminary basis by 18 percent to 6.4 billion euros. In March alone, sales declined by almost 1.4 billion euros or 47 percent, the company said.

It is currently not foreseeable when the group airlines will be able to resume flight operations beyond the currently applicable return flight schedule. The Group therefore expects a significantly higher operating loss in the second quarter than in the first quarter. The Lufthansa Group’s available liquidity is currently around 4.4 billion euros.

Shortly before the close of trading on Thursday, the Lufthansa share expanded its losses and closed just under two percent in the red.

More: Ryanair boss O’Leary: “Lufthansa wants to enrich the state”


“Lufthansa wants to enrich itself in the state”

London The corona crisis hit the aviation industry particularly hard: For many weeks, the machines of many companies have been standing on the ground unused. But Ryanair will “probably survive significantly longer than any other airline,” says Ryanair boss Michael O’Leary in an interview with the Handelsblatt.

“We went into this crisis with almost four billion euros in cash on our balance sheet. Even if we don’t have any sales by the end of the year, we still have enough money, especially after support measures such as short-time benefits have been introduced in most EU countries. ”

At the same time, he expects that there are a number of other airlines that will not survive until then. He rules out Ryanair’s use of government aid – and criticizes rival companies such as Lufthansawho do that. “I think airlines like Lufthansa and Air France are using the Covid crisis to enrich themselves with incredibly high sums from the state.”

According to the manager, air traffic will not resume before June. “But life for the airline industry should not become really normal before summer 2021.”

At the same time, O’Leary does not expect the cheap tickets to end: “If we are allowed to fly again, all airlines will be under pressure to fill their planes”. However, he doesn’t have any good news for his employees: at Ryanair, up to 20 percent of jobs will be cut in winter.

Read the full interview here:

Ryanair typically completes 2500 flights a day across Europe. Because of the corona crisis, there are less than 20, and have been for a few weeks. How long can Ryanair survive?
Probably significantly longer than any other airline. We went into this crisis with almost four billion euros in cash on our balance sheet. Even if we don’t have sales by the end of the year, we still have enough money, especially after support measures such as short-time work benefits have been introduced in most EU countries. However, I would expect that there are a number of other airlines that will not survive until then.

Experts speak of an existential crisis for the industry, and some airlines have called for government aid. How do you feel about it?
We are not asking for government aid. And we don’t think any airline should get government support.

I beg your pardon?
It is important that any support is transparent and accessible to all airlines. The system of short-time work benefits, where salaries are paid, is a good measure. And it doesn’t quite make sense to me why an airline still needs state aid if it can use short-time work. The fleets of all airlines have been shut down. And if the state then pays the employees’ wages, what else do you need government aid for?
The case of Lufthansa in particular is remarkable: it wants state aid in Germany, Belgium, Switzerland and Austria, for companies that have a German owner. Austria is currently debating whether the Austrian taxpayer should support the daughter of a German company.

And, should he?
No! The planes are on the ground, salaries are paid, there are no airport fees, no fuel costs, no maintenance – what do you need government support for?

So wouldn’t Ryanair want support for (the Austrian subsidiary) Lauda?
We rule that out.

Short-time work applies to Ryanair employees and they have to forego salary. What about you?
The management waives 50 percent of the salary in April and May and as long as the crisis continues – even if we of course work full-time. If there are no flights, there is no work and you are not paid. We have to set a positive example, after all we cannot expect everyone to suffer without us doing it ourselves.

“Nobody will lose their money”

Some customers have complained on social networks that they do not get their money back for canceled flights, but are only offered vouchers.
One must not forget what situation we are in at the moment. In a normal month, we would perhaps refund 5,000 to 10,000 tickets, and we have enough staff to handle such requests. But the number of inquiries has increased by 1,000 percent – and our employees who are responsible for processing refunds are based in the home office.
We sincerely apologize to anyone who is annoyed with the delay. But it will still take weeks and months, even if the situation has returned to normal, until all inquiries have been processed. And issuing vouchers is faster, that’s why we offer it. But nobody will lose their money.

Another topic: In Germany, a new owner is looking for Condor. You haven’t been interested so far – has that changed?
No. In the current environment, no airline can make a takeover. I suspect that Condor will qualify for substantial government aid from Germany because Lufthansa will also receive substantial aid, in addition to the aid for salaries. Why if you get short-time work benefits at the same time? I think airlines like Lufthansa and Air France are using the Covid crisis to enrich themselves with incredibly high sums from the state. Check out IAG (the parent company of British Airways and Iberia, editor’s note), they do not request state aid. When an airline is not viable, when salary costs are borne and there are no other costs such as airport fees, something very basic is wrong with the business plan. This also applies to Virgin Atlantic.

Because Richard Branson, the founder of Virgin Atlantic, had publicly asked for government aid? After all, he had offered his Caribbean island as security.
Oh yes, great. But why not its stake in other companies? And why didn’t he offer to move back to the UK and pay taxes here?

I see what you’re getting at. When do you expect the industry to return to normal?
It will be some time before normality returns. We expect most EU countries to announce and relax their travel restrictions towards the end of April, by the end of May. Air traffic is expected to restart a month later. But life for the airline industry should not really become normal before summer 2021.

“It is not feasible for people to keep their distance”

Various models are discussed for the first time after the strict restrictions have been lifted. Do you think it makes sense that travel is initially only allowed in Germany?
No. That has to be done at European level. You can not only offer flights in Germany, or only in Spain or France, but not between Germany and Poland or Spain and Portugal.

What would be sensible steps in your opinion?
One would have to control the temperature of passengers, as is done in Asia. Face masks would have to be worn in the terminals and planes, both by the crew and the passengers. The idea that people keep a sufficient distance cannot be implemented.

What do you think of the suggestion that the center seat should be left free?
This is complete nonsense. This is not very effective, after all, the distance between the seat by the window and the aisle is too small, as well as to the front and rear rows. And how should the distance on the way to the seat be maintained? In the terminal and on the bus? Checking the temperature and wearing face masks makes more sense.

Do you expect people to want to fly again after lifting the restrictions?
There will be demand in June, July and August, especially from travelers visiting their friends and family. But tourists will also fly because that is the only time they can go on vacation before winter. However, the load factor will be lower, and so will the ticket prices.

Are the ticket prices cheaper?
If we can fly again, all airlines will be under pressure to fill their planes. Hotels will also try to lure tourists with cheap offers before school starts again. After all, this is their only vacation season this year. All airlines will do special promotions. And I wouldn’t be surprised if the demand rises sharply. Many people have been locked up for the past two or three months.

What is the perspective for your employees? Will there be layoffs at Ryanair?
I think it is inevitable that jobs will be deleted. Traffic in the winter timetable is likely to be 20 to 30 percent lower. We will use fewer planes and fewer flights. We will need fewer staff there.

To what extent?
I think 10 to 20 percent job cuts in winter is almost inevitable. The passengers will come back. But that will take time. We are currently experiencing an unprecedented pandemic. And who knows if there won’t be another wave. Some airlines will not survive. But those who do will have better growth opportunities than before.

More: State money is of no real help to aviation


Corporate management in corona times – this is how managers succeed

Dusseldorf Renowned management expert, consultant and bestselling author Fredmund Malik knows what the top executives are most concerned with these days. It is a question of “how do they start up the system – the economy and their own company – again,” said the professor of corporate management at the University of St. Gallen in an interview with the Handelsblatt. It was a huge challenge. “The pressure is enormous, it has never been so great. Nobody sleeps well anymore, everyone is busy day and night with the question of how to proceed. ”

The 75-year-old believes that government aid is the right instrument in the corona crisis and in view of the state-mandated stagnation of the economy. Even if that does not correspond to the market economy ideas. “The state must secure the financing of companies that are in need through no fault of their own,” Malik is convinced. However, the state must restrain itself as far as possible as an entrepreneur and act as a kind of silent partner. “The leadership must lie with the management.”

The consultant sees one of the greatest challenges in the increasing complexity, which would increase even further due to the corona crisis. “Many want to reduce complexity, make things easier,” says Malik. But that is increasingly the wrong reflex.

“Complexity is an important raw material in a world that is constantly changing unpredictably. Complexity is the source of intelligence, creativity, adaptability and flexibility. ”If you deal with complexity correctly, you can best react to the unexpected because you have more room to maneuver. “And in more and more cases, it’s simply impossible to reduce complexity.”

The most positive thing he has heard from a manager in the last few days is “the will and belief expressed with great thought: we can do it!” Many do not yet know how, but have the courage to admit exactly that.

Read the full interview here:

Professor Malik, what is the top concern of Germany’s top managers right now?
The question of how they start up the system – the economy and their own company. A country like Germany has about five percent of its population in terms of organizations; not only companies, but also administration, hospitals, schools. That is around four million organizations.

If only one percent, i.e. 40,000, of them is in a mutual exchange relationship, starting up is a huge challenge that we have never faced before. Maybe after World War II, but not in peacetime.

What is the hardest part?
The complexity. This has little to do with business administration, it goes beyond business administration. We are in a deep transformation and it is likely to be the largest in history. One of the driving forces is digitization. Because it leads to the networking of everything with everything, globally – and thus more and more complexity.

The two great coordinators of humanity become meaningless – namely space and time. You don’t have to travel to China to do business in China. It goes directly from here and at lightning speed – and the feedback is back here just as quickly.

But this is not a new phenomenon. We have been talking about digitization since the 1970s.
But not at the level and with the performance as today. We have to understand the corona crisis as part of this transformation, this change.

You have to explain that!
The “creative destruction” according to Joseph Schumpeter can best be illustrated with two “S” -shaped curves, one red and one green, which overlap. The colors have no political meaning. I take S-curves because nothing grows linear in nature, neither does the economy. The red S curve represents the old system. You can stretch it a bit beyond your time, but eventually it will collapse.

However, the new system, the green S-curve, is not so far that it could completely replace and replace the old system. We are in transition, many processes have not yet adapted. The corona virus is now forcing us to do this.

In what way?
Because of the physical distance that we all have to maintain, we are experiencing an unprecedented surge in decentralized work and in telecommunications. This will accelerate the transformation – and further increase the complexity. If you consider how many conversations are currently being held in video or telephone conferences, then this shows the high degree of complexity.

We have also been talking about complexity for a long time.
Yes, but not to the same extent as it is now in the crisis – and only a few top executives have been able to deal with it in sufficient detail so far. Many want to reduce complexity that make things easier. This is increasingly the wrong reflex, the opposite is correct. Complexity is an important raw material in a world that is constantly changing unpredictably. Complexity is the source of intelligence, creativity, adaptability and flexibility.

The right way to deal with the unpredictable is to deal with the complexity because you have more room for maneuver. And in more and more cases, it is simply impossible to reduce complexity. On the other hand, the solutions for highly complex challenges are often amazingly simple.

The corona crisis will accelerate the transformation – and further increase the complexity.

For example?
One can try to regulate a highly complex traffic intersection with a complicated and expensive traffic light solution. But you can also do it with a roundabout – elegant, effective and cheap, with a reduction in accident rates of up to 60 percent.

So the top managers are poorly equipped for this increasing complexity?
About half are struggling. Many confuse complexity with complexity, for example caused by increasing bureaucracy. There are of course many starting points for simplification, for dismantling. But that’s different.

What is the best way to deal with increasing complexity?
I like to use an example: Take a classical symphony by Beethoven. I can play Beethoven in two ways. First, one after the other: first the first violins, then the second and third violins, then the cellos, the flutes and finally the large wind instruments. Every note has been played at the end, every pause has been made – but it is not a symphony. But if we let all 160 musicians play together, it’s a symphony. Simultaneously instead of sequentially. And all that is needed is a conductor.

Let’s move from music to government aid. Some corporations like that Lufthansa are currently negotiating. What does that do with a strong and successful company and its management to date?
It will certainly be very difficult for management, like many other top managers in similar situations. The pressure is enormous, it has never been so great. Nobody sleeps well anymore, everyone is busy day and night with the question of how to proceed.

What do you think of the fact that companies have to be saved by the state? Is this the right tool in the crisis, or do you say: the state is never the better entrepreneur?
The state must secure the financing of companies that are in need through no fault of their own. At the moment we have no choice but that all organizations – including the state – support each other. Even if this does not correspond to our market economy ideas. As long as the situation does not deteriorate – some are already talking about possible second waves, for example in China – we can overcome the crisis.

Lufthansa aircraft

The group is negotiating state aid. “It will certainly be very difficult for management,” says consultant Malik.

(Photo: AP)

But the state must restrain itself as much as possible as an entrepreneur and act as a kind of silent partner. The leadership must lie with the management. But the state has to determine the rules for dealing with the disease and is faced with a lot of uncertainty. The complexity required for this is only gradually achieved – through “trial and error”.

The state is already indirectly intervening in other areas, with the government expecting companies to participate in the manufacture of protective masks and other tools to contain the crisis.
The protective mask is a relatively banal product, but it cannot be economically produced in this country due to the high wage costs. That would be far too expensive. After the crisis, such goods have to be weighed up, which will be regulated by the state again in future and thus produced here.

You won’t get any further with the rules of business administration. The necessary economies of scale cannot be realized in Europe. The state has to assess this soberly in terms of precautionary measures and then decide that protective masks will no longer be produced only in Asia in the future. And for this, government funds must also be made available.

Does this generally also apply to significantly more complex supply chains? It can be heard from the pharmaceutical industry that the manufacture of medicines is sometimes at risk because raw materials are only produced in China or India. In other words: have we exaggerated globalization?
You can see it like that. Indeed, all dependencies have to be re-evaluated and, depending on the sector, production may have to be relocated. But this cannot happen everywhere because the cost differences are huge. And with that, the competition there will set limits.

I live in Switzerland. Before the corona crisis, a different kind of stockpiling was carried out here. Many simple relief goods are already more readily available here, and against all business logic. This can now be seen as an example in other countries.

Are you indirectly advocating a stronger state? The national airline Swiss did not prevent this from ending its independence years ago. It seemed that Swiss was better off under the Lufthansa roof.
At that time, this decision was made out of necessity to avoid the breakdown. The end of the independent Swiss was actually very difficult for the whole country at the time. That hurt. The heart of the nation bled. But the rescue was only possible at the very high price of a takeover by Lufthansa. After all, it has worked quite well under the Lufthansa group roof.

The fear of takeovers is likely to plague many CEOs again since stock prices plummeted across the board in the corona crisis. What do you advise?
That is a very big challenge and also a threat. The respective CFO is now required. If the worst comes to the worst, he must organize appropriate countermeasures.

The stock price needs to go up again, that’s the best protection. You also have to control this communicatively. The entry of a desired anchor investor can also be helpful. Above all, management must guarantee that the company functions as an organization.

The leadership must lie with the management. However, the state must determine the rules for dealing with the disease.

How do you keep a company going in such a crisis?
This is where cybernetics comes into play, the science of communication, self-regulation, self-regulation and self-organization – in one word: the science of functioning. The management in a company must communicate in such a way that everyone knows what the state of the company is so that they can respond correctly.

Feedback, the most well-known term in cybernetics, is very important here. We always have to send signals where we are. If you didn’t say “yes” over and over again in this interview, nodded in agreement or looked in doubt, I wouldn’t know how the conversation is going. This feedback system works well in an area that most people know.

In air traffic. If the tower pilot instructs the captain in the cockpit to climb from 3,000 to 4,000 meters, what does the pilot do?

Soar to an altitude of 4000 meters?
Most of the managers I ask say the same. No, the pilot first makes sure that he has understood it correctly. He gives a confirmation of the message by repeating it. He says: “New flight altitude 4000 meters, over.” He even says when he’s finished speaking. So what does the pilot do in the tower? He confirms the confirmation. Only then does the pilot climb to an altitude of 4,000 meters, and when he is there, he reports it. And the tower pilot confirms that he has understood it. So we have a double closure of the feedback cycle.

And what do you mean by cybernetics?
It is one of several core elements of cybernetic functioning. There is no functioning without functional feedback. This feedback system works across all countries and airports. In all seasons, in all weather conditions, day and night. And there are almost no accidents with 150,000 to 200,000 flights a day in normal times.

Thanks to digitalization, more and more factories are working, as are driver assistance systems in cars and surgery stations in clinics. In management, on the other hand, it only works in about a third of the companies.

Why does it only work for a fraction?
It is partly because it is not taught systematically. Management training is still too firmly anchored in business administration. And as long as you can look each other in the eye, it works. The feedback comes automatically because I can read the facial expressions.

But if we have to communicate at a distance worldwide and now in this crisis, then feedback is becoming increasingly important for a functioning understanding. The crisis will help here.

Speaking of communication: is it right to be ruthlessly honest, like Volkswagen-Chef Herbert Diess it was when he said on a TV talk show that VW burns two billion euros every week in the shutdown – or does that only stir up more uncertainty?
No, I think in this case the openness is right. The top executives of such a large group in particular have to say what challenges they face; name the dimensions of the problem, even in sums. There are countries like China, so we don’t know if the information is correct.

That is why it is also socially important that our managers create trust through transparency. The question is not whether you talk about it. The key is timing; and tonality – these are important elements of real leadership.

What was the most positive thing you’ve heard from a manager in the past few days?
The will and belief expressed with great thought: We can do it! We don’t yet know how, and we have the courage to admit that, but we can do it.

Professor Malik, thank you very much for the interview.

More: Home office, short-time work, layoffs – that’s how Corona changes the world of work