It seems Lufthansa and the German Government have come to an arrangement of state aid for the airline group.
The aid agreement between Deutsche Lufthansa and the Federal Republic of Germany covers stabilization measures and loans of up to EUR 9 billion.
The Economic Stabilization fund (WSF) will make silent contributions of up to 5.7 billion euros in total in the assets of Deutsche Lufthansa AG. Of this amount, approximately EUR 4.7 billion is classified as equity per the provisions of the German Commercial Code (HGB) and IFRS.
For this, the Federal Republic of Germany will build a 20 per cent stake in Lufthansa. It may increase its stake to 25% plus one share in the event of a takeover of the company.
The move is subject to the approval of the European Commission and any competition-related conditions (such as the giving up of slots at airports).
So, who isn’t happy about this? Ryanair of course, who say that Non-State Aided airlines like Ryanair, EasyJet, BA and others, will now have to compete with Lufthansa in both the short-haul and long haul markets without equivalent State Aid,
As for Michael O’Leary? He has choice words as always
“Lufthansa is addicted to State Aid. Whenever there is a crisis, Lufthansa’s first reflex is to put its hand in the German Government’s pocket. While most other EU airlines can survive on just payroll support schemes (for which we are extremely grateful), Lufthansa claims it needs another €9bn from the German Govt, €1bn from the Swiss Govt, €800m from the Austrian Govt, and €500m from the Belgian Govt as it stumbles around Europe sucking up as much State Aid as it can possibly gather.
It is deeply ironic that the German Govt, which lectures all other EU countries about respecting EU rules, has no difficulty breaking the State Aid rules when it comes to Lufthansa. It waved through Lufthansa’s purchase of Air Berlin 2 years ago, which gave Lufthansa a monopoly in the German domestic market, and now when Lufthansa claims it needs even more State subsidies, the German Government writes a cheque for €9bn, at a time when its competitors Ryanair, EasyJet, BA, among others, do not need such State subsidies to survive.
And of course, legal action
Ryanair will appeal against this latest example of illegal State Aid to Lufthansa, which will massively distort competition and level playing field into provision of flights to and from Germany for the next 5 years.”
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