EU Commission re-examines corona aid for Lufthansa
Published: Monday, Jul 8th 2024, 15:30
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The EU Commission is once again investigating the billions in state aid for Lufthansa during the coronavirus pandemic. An in-depth investigation is to clarify whether the German government's aid from 2020, which has long since been repaid, was in line with European competition rules.
The background to the investigation is a ruling by an EU court just over a year ago, which ruled on complaints by Lufthansa competitors Ryanair and Condor. The judges in Luxembourg ruled at the time that the Commission should not have approved German state aid amounting to around six billion euros.
The court argued that the officials had made several errors in their assessment, so that the Commission's approval was declared null and void.
Other airlines also affected
The state aid provided by the Netherlands and France to their affiliated airlines KLM and Air France was also deemed unlawful in similar rulings. It remains to be seen whether the Commission will launch a new investigation into the rulings, as it did with Lufthansa. All airlines have lodged appeals against the respective rulings.
In the Lufthansa case, the competition authorities should have examined more closely whether the company still had its own collateral to obtain loans for itself. The court also criticized the fact that Lufthansa's market power at several airports was underestimated.
New investigation also into market power at airports
The Commission is now re-examining its decision and intends to take particular account of Lufthansa's market power at the airports in Vienna and Düsseldorf. However, the authority emphasizes that the initiation of an investigation does not yet say anything about its outcome.
The question remains as to what consequences a different investigation result and a new state aid decision could have. It is conceivable that additional claims for interest or new conditions such as the surrender of take-off and landing rights (slots) at the controlled airports could be imposed.
Lufthansa expected new audit
Lufthansa already stated in its annual report for 2023 that it was expecting a formal investigation by the EU. On Monday, a spokeswoman referred to the full repayment of the aid. The stabilization measures had already been fully completed at the time of the European court's ruling.
The travel restrictions during the pandemic had brought Lufthansa's business to a virtual standstill. Tens of thousands of jobs were on the line at the Group, which employs around 138,000 people. This is why the German government supported Germany's largest airline in spring 2020.
State aid not called up in full - Repaid in full in the meantime
Germany, Austria, Switzerland and Belgium had pledged a total of nine billion euros in aid to the Lufthansa Group, but this was not drawn down in full. The lion's share of the sum came from Germany, Lufthansa's home country.
Six billion euros, including a 20% share package and silent participations, were provided by the German government's Economic Stabilization Fund (WSF), while the state-owned KfW Bank contributed a loan of one billion euros. The European partners only joined the aid pact at a later date.
The rescued group had repaid the aid in full by the end of 2022 and partly replaced it with its own debt. Lufthansa CEO Carsten Spohr explained that he would rather be indebted to the market than to the taxpayer. The German state did not lose any money on the bottom line, but actually made a profit of around 760 million euros from interest and share sales.
©Keystone/SDA
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