Lufthansa agrees on compromise edging closer to EU bailout approval
GERMAN airline Lufthansa has agreed on a compromise with the German government and the EU on the way towards final approval of a 9-billion-euro (9.7-billion-dollar) bailout deal.
Lufthansa’s supervisory board decided to accept a compromise worked out between negotiators for Berlin and the EU Commission which involves the airline giving up several slots at two airports, Lufthansa said in a statement early Saturday.
Late Friday, government sources told dpa the German government has also agreed to the compromise.
EU competition authorities plan to take slots for take-off and landing away from Lufthansa at its main hubs of Frankfurt and Munich, according to Lufthansa.
The airline said that the scope of commitments required of it by the EU Commission had been reduced compared to initial plans.
The company must remove up to four of its aircraft from Frankfurt and Munich airports to allow competitors to take those slots. This is arithmetically three take-off and three landing rights per aircraft a day, according to Lufthansa.
This option is reportedly only available to new competitors at Frankfurt and Munich airports for at least 18 months.
If no new competitor makes use of the option, the option will also be extended to existing competitors at the respective airports. The slots are to be allocated as part of a bidding process - and only to be taken over by a European competitor who has not received any significant state recapitalization due to the coronavirus pandemic.
The EU said that the compromise reflects commitments from Germany and Lufthansa “to preserve effective competition.” “This would enable a viable entry or expansion of activities by other airlines at these airports to the benefit of consumers and effective competition,” a spokesperson for the EU said early Saturday.
Lufthansa’s supervisory board now has to approve the rescue package including these requirements, called for by the European Commission’s competition watchdog. The company then plans to convene an extraordinary general meeting promptly to obtain shareholder approval for the package.
The 9-billion-euro bailout deal provides for aid and equity measures for the ailing carrier. In addition to full approval from Lufthansa’s supervisory board, the European Commission’s competition watchdog still also needs to sign-off.
The Economics Ministry in Berlin also pointed out that the bailout has not had final approval yet.
“In addition, talks with the EU Commission on state aid approval are ongoing,” the ministry said in a statement early Saturday.
The two sides earlier this week agreed on the much-anticipated bailout deal to help the airline - Europe’s second-largest by passenger numbers - cope with losses from the coronavirus pandemic.
The German government says that Lufthansa had been profitable before the pandemic, but is now facing the biggest financial crisis in its history. The pandemic has grounded around 90 per cent of its planes.