Following the revelation last week that Apollo Global Management is preparing a €500 million ($535 million) investment to support AFI KLM E&M, reports have emerged that private equity firms are to bid for a minority stake in Lufthansa Technik.

Reuters reported that Lufthansa will hold an auction later this year for the 20% stake in its maintenance arm, while Air France-KLM stated last Friday that it was negotiating with Apollo about an investment in “an operating affiliate of Air France, owning of a pool of spare engines of Air France dedicated to its Engineering and Maintenance Activity.”

The Apollo deal will allow Air France-KLM to partially repay state aid, and while Lufthansa also owes large sums in this regard, questions were asked during a recent earnings call about why it is still pursuing a sale when its passenger and maintenance markets are picking up.

In the first quarter, for instance, Lufthansa Technik revenue jumped 60%, driven by engine and component maintenance sales.

Lufthansa Group chief executive officer Carsten Spohr responded that the sale was never about easing COVID-19-related liquidity pressures, but was rather about the long-term positioning of Lufthansa Technik.

“There's a strategic reasoning here,” he said, noting that “bringing somebody else on onboard” would create “additional investment opportunities” for Lufthansa Technik—opportunities that its parent company, which wants to focus more on its core aircraft business, might struggle to provide.

And although Lufthansa has not confirmed the Reuters story, private equity firms appear to be the most likely candidates to create the investment opportunities that Spohr described. 

“This is not part of our liquidity management or planning, rather of our strategic positioning of the group in its various parts for the long-term future,” Spohr added.