01 June 2020
11:32
–
After some slight concessions, Lufthansa obtained the agreement of the European Commission on German aid to 9 billion euros. The deal must now go through the Lufthansa supervisory board, then to an extraordinary GA.
–
The way is clear for German aid to Lufthansa. Afterintense discussions between Lufthansa, Germany and the European Commission, an agreement was reached overnight between Friday and Saturday.
–
The Commission had asked that Lufthansa sell up to 20 planes and even more slots. An agreement was finally reached on 8 planes parked representing 24 slots (12 round trips) over Munich and Berlin.
–
“Lufthansa gets a huge financial advantage, but they will have to restructure after taking all this money. So Germany will bring opportunities.”
Jozsef Varadi
Wizz CEO
–
–
–
The German government supported Lufthansa with all its weight during the talks. The new slots made accessible in Munich and Frankfurt will be, Firstly, for new competitors at these airports. The invitation to tender will then be extended to existing competitors if new operators do not appear.
–
“The slots should not be taken over only by a European competitor who has not received public aid himself because of the coronavirus pandemic, “added the German group in a statement.
–
Opportunities for low cost
Even though Lufthansa has gotten a lot of concessions from Europe, low cost companies are in ambush to take over certain parts of his business on a lucrative German market. “Lufthansa gets a huge financial advantage, but they will have to restructure after taking all this money. Germany will therefore bring opportunities,” said Wizz Air CEO Jozsef Varadi in an interview. The 12 daily round-trip slots which must be made accessible to the competition, in equal parts in Frankfurt and Munich, have enough to attract the interest of companies like Ryanair or Wizz, in fact.
–
–
If this materializes, it could put downward pressure on the prices of these lines. It remains to be seen what scale it could take, as many passengers fly on these important German hubs to take long-haul flights Lufthansa. The low cost are more specialized on the point to point. They might see it as an opportunity, as Germany is an important business destination.
–
The great return of the German state in Lufthansa
The rescue also provides that the German state take 20% of the group for 300 million euros, in addition to injecting 5.7 billion euros of non-voting funds, one billion of which can be converted into shares. It would be the first time that the German state has returned to the capital of the company since its complete privatization in 1997.
–
Berlin reserves the right to increase its participation to 25% and an action, or the blocking minority, but only “in the event of a takeover bid by a third party” or non-payment of interest.
–
Germany also guarantees loan of 3 billion euros and obtains two seats on the supervisory board Lufthansa, which is prohibited from paying dividends and paying bonuses to its managers.
–
The German aid case is therefore almost complete. All that remains is to pass the Lufthansa Supervisory Board and be approved at a general meeting. In view of theLufthansa’s dramatic liquidity situation, this could turn out to be just a formality.
–
Brussels Airlines works council
Ryanair has announced that it wants to challenge the plan before European justice, calling it “illegal state aid that will distort competition enormously”.
–
The German aid case is also of interest to the Belgian State and the workers of Brussels Airlines, but for another reason. They hope to be able to move forward in this way with Belgian aid. It could also impact the restructuring desired by management. The next works council is for this Tuesday.
–
–
