Ryanair to appeal €9bn Lufthansa bailout that ‘distorts competition’

RYANAIR challenged Germany’s €9bn rescue package for Lufthansa yesterday, saying it distorted competition, while the German carrier moves towards finalising the deal next month.

The German governmentbacked aid will allow Lufthansa to “engage in below-cost selling” and make it harder for Ryanair, its Laudamotion subsidiary and rival low-cost carrier easyJet to compete, Ryanair chief executive Michael O’Leary said in a statement.

“Ryanair will appeal against this latest example of illegal state aid to Lufthansa, which will massively distort competition,”he said.

Lufthansa is hoping for a quick nod from the European Commission for the bailout package, people close to the matter said. The EU has relaxed state aid rules designed to protect competition as a result of the Covid-19 outbreak.

“This should be a matter of days,” one of the sources said.

Lufthansa’s supervisory board is expected to meet today to sign off on the rescue deal and the invitation for an extraordinary shareholder meeting is expected shortly thereafter, the sources said.

In total, governments have promised $123bn (€112bn) of support - mainly in debt - to airlines, predominantly in the United States and western Europe, industry data showed yesterday.

The head of the International Air Transport Association (IATA), which mainly represents traditional network airlines but not Ryanair and other low-cost rivals, defended the reliance on government aid, saying it was an exceptional response to the crisis.

“It is understandable to avoid a collapse of this sector,” director general Alexandre de Juniac told reporters.

The Covid-19 crisis has already pushed several struggling airlines – including Flybe and Virgin Australia – over the edge.