The European Commission has no objections to the state aid package for Lufthansa. However, there are conditions – including a ban on takeovers.
Green light from Brussels: The European Commission has approved Germany’s planned contribution of 6 billion euros to increase Lufthansa’s equity. Together with state-guaranteed loans amounting to three billion, the rescue package amounts to a total of nine million euros.
However, Lufthansa must meet requirements. It was already known that the airline in Frankfurt and Munich had to hand over 24 slots to the competition each day and is now confirmed by the Commission. It is also affirmed that the Group may not pay dividends or buy back shares until 75 percent of the aid has been repaid. Bonus payments to management are also prohibited.
No takeover of Condor or Alitalia
In addition, the EU imposes a ban on takeovers. According to this, Lufthansa “must not acquire more than 10 percent of shares in competitors or other companies operating in the same business area until the recapitalization instrument has been replaced by at least 75 percent,” the commission writes.
Speculations about a possible takeover of Condor or Alitalia by Lufthansa had already become unlikely due to the Corona crisis. Now they are completely off the table. The EU also maintains that Lufthansa cannot “use the aid to support the economic activity of integrated companies that were already in economic difficulties before December 31, 2019”.
No help for troubled daughters
The Commission does not go into exactly how this point is defined. Lufthansa already announced “turnaround measures” for its daughter Eurowings in summer 2019 so that the low-cost airline could “get into the profit zone as quickly as possible”.
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