Headwind for the Lufthansa rescue

After long negotiations, the federal government and Lufthansa agree on a rescue package made up of taxpayers’ money. But Brussels doesn’t approve of the plans. Chancellor Merkel wants to fight.

Investors are pleased, the stock market price is rising.

In the state rescue negotiations for Deutsche Lufthansa, there is a sharp headwind from Brussels. The EU Commission wants to make the release of the German EUR 9 billion aid package subject to conditions. According to FAZ information, the most incisive is that the group is to be forced to surrender start and state rights in Frankfurt and Munich. That could have a serious impact on Lufthansa, whose business is also based on transfer traffic via the two hubs. While there was also dissent between the group and the federal government in the negotiations on the rescue package, both should now oppose the request from Brussels unanimously. Chancellor Angela Merkel (CDU) has reportedly announced a “tough fight” in the party presidium.

After all, the company and the government were able to announce an agreement on Monday. The Committee of the Economic Stabilization Fund (WSF) approved a package that the Lufthansa Executive Board also endorsed. It stipulates that the WSF will receive a 20 percent stake in the group through new shares, the fund pays 2.56 euros per share, so that Lufthansa will receive around 300 million euros.

Bouffier: “Damage to Germany as an aviation location”

The group is to receive up to 4.7 billion euros through a silent contribution, plus a silent participation of around one billion euros, which corresponds to 5 percent of the shares, but can only be converted into shares under certain conditions – for example in the event of an attempt Takeover or failure to pay the coupon. 3 billion euros come from a syndicated loan from KfW Bank. The federal government receives two mandates on the supervisory board, which are to be filled with experts.

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Economics Minister Peter Altmaier (CDU) spoke of a “sustainable and sensible” solution for Lufthansa, its employees and taxpayers. “We have sent a convincing signal for the market economy, but also for the will of the federal government to defend the technological and economic sovereignty of this country.” not a. The minister was confident about the negotiations with Brussels. So far, all aid projects in the Corona crisis have been approved.

For its part, the EU Commission rejected earlier allegations that Germany and Lufthansa would be disadvantaged by conditions imposed by Brussels. She refers to the Corona state aid rules for the recapitalization of companies in which the state participates. It stipulates “additional measures” to avoid restraints of competition if a company with significant market power receives capital injections of more than 250 million.

According to the EU authority, around 6 billion euros from the aid package went to capital injections, and there is no doubt about the airline’s market power. The “additional measures” are likely to relate to the transfer of take-off and landing rights. Hesse’s Prime Minister Volker Bouffier (CDU) criticized that the demands were “irrelevant and harm Germany as an aviation location”. The Frankfurt air traffic hub should not be restricted.

No dividends and bonuses

According to the Commission, Germany has not yet notified the Lufthansa package in Brussels. The EU authority issued significantly relaxed special rules for the corona crisis two months ago. However, these provisions only apply to government loans. Two weeks ago, the Commission added special rules for state participation. Competition Commissioner Margrethe Vestager said in the FAZ that the Commission had to look more closely at such partial nationalizations than the state loans common in the crisis. “This is a much more serious distortion of competition,” said Vestager.

The Berlin accusation that Brussels handled the aid for Air France, SAS and Finnair more generously, goes to nothing, according to the Commission, because the aid is loans. If the French state becomes even more involved in Air France than before, the Commission would have to re-examine this additional state participation. When joining the state at Lufthansa, the company is also not allowed to pay dividends or bonuses as long as the state has not withdrawn.
The relationship between Lufthansa and the EU Commission is likely to be strained from the time after the Air Berlin insolvency.

The local market leader wanted to take over a larger part of the competitor with the subsidiary Niki, but failed because of concerns in Brussels. Via the Austrian entrepreneur Niki Lauda, ​​the company finally came to Ryanair under the name Laudamotion, which now wants to close its home base in Vienna due to the crisis and a wage dispute.