It seems the Lufthansa group has swallowed its pride and has chosen to accept revised conditions that the European Commission has imposed, so it can access €9 billion of German state aid.
In addition to what the group will have to give up in terms of ownership as part of the bailout funding, Lufthansa will be obliged to transfer to one competitor each at the Frankfurt and Munich airports up to 24 take-off and landing rights (slots), i.e. three take-off and three landing rights per aircraft and day, for the stationing of up to four aircraft.
This will be offered for one and a half years to new competitors at the Frankfurt and Munich airports. If no new competitor makes use of this option, it will be extended to existing competitors at the respective airports.
The slots will be allocated in a bidding process. In addition, the slots can only be taken over by a European competitor that has not itself received any substantial state recapitalization as a result of COVID-19.
The previous deal that the European Commission were offering seemed to be a lot harsher – with 72 slots to be handed over according to Reuters.
Whilst the Executive Board have rubber-stamped this change, it will need to through Lufthansa Supervisory Board to approve the stabilization package negotiated – including the commitments to the EU Commission. This will be then subject to an Extraordinary General Meeting to obtain shareholder approval.
And you can lay bets that Ryanair will object this all of the way. The quote from its CEO Michael O’Leary when this was first announced come to mind:
“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.”
It’ll be interesting to see how this plays out.
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