Lufhtansa to drop out of the DAX 30 index

  •   05/06/2020 - 11h27
  •   HARMANT Adeline

The German stock exchange operator in charge of the DAX 30 announced this morning that the airline Lufthansa was preparing to leave this benchmark index after its share price fell sharply. We suggest you discover here some additional explanations about this news as well as our stock market advices on this stock.

Lufhtansa to drop out of the DAX 30 index
Image copyright: LV Aircraft Photography

Departure of Lufthansa and entry of Deutsche Wohnen:

So today we learned that the leading European air transport group Lufthansa will leave the DAX index, which includes the 30 leading stocks on the German stock exchange. Let us recall that this company was the subject of an unprecedented rescue plan which unfortunately did not allow its share to be maintained, it even melted on the market.

In the same announcement, we also learn that the real estate group Deutsche Wohnen will replace Lufthansa in the composition of the German index and this, from June 22nd. Lufthansa will be downgraded to the MDax for mid caps. It should be noted that the composition of the DAX 30 index is regularly reviewed by the Deutsche Börse according to various criteria including capitalization and trading volume.

 

An unprecedented fall for the German airline:

The Lufthansa group had been part of the DAX 30 since 1988, the year of its creation. But this value started to lose a lot of points before the coronavirus crisis. With the pandemic, the fall accelerated even more because of the company's shutdown.

During yesterday's session, the Lufthansa share fell to 10.31 euros, a loss of 37% since January and the capitalization of the group fell to 4.8 billion euros.

The share price thus rose to 15 euros at the beginning of the year before reaching 7 euros in April due to the losses incurred by this sector of activity, which is one of the most exposed to the current crisis. Indeed, the first quarter saw a net loss of 2.1 billion euros and the recovery is expected to be particularly slow for this activity.

The company has nevertheless benefited from public aid of 9 billion euros and credits guaranteed against an entry in the capital of the State which becomes its first shareholder as well as concessions to the competition.

Following the announcement of the group's exit from the benchmark German stock market index, Lufthansa boss Carsten Spohr said that he had to withdraw from the index.der his place in this index is a pity and hurts but said that in the current situation, the question of being part of the DAX or MDax was not so important.

 

Who is Deutsche Wohnen replacing Lufthansa in the DAX?

The Deutsche Wohnen group, which replaces Lufthansa in the DAX 30 index, is a company which owns more than 164,000 properties, a large proportion of which are residential and in Germany. Its current market capitalisation is EUR 15 billion.