The supervisory board of the Lufthansa Group has declined to
approve a $9.9 billion rescue package from the German government, citing
conditions that would be required by the European Commission.
The conditions reportedly include concessions of valuable landing
and departure slots, which “would lead to a weakening of the hub function at
Lufthansa's home airports in Frankfurt and Munich,” the airline group said. “The
resulting economic impact on the company and on the planned repayment of the
stabilization measures, as well as possible alternative scenarios, must be
Lufthansa Group nevertheless said that its supervisory board
continues to regard the German government’s stabilization package “as the only
viable alternative for maintaining solvency.”
Under the package, the German government would invest 5.7
billion euros ($6.3 billion) in Lufthansa in exchange for a 20% equity stake in
the company and two positions on the 20-seat board of directors. The stake
could be increased to 25% in the event of a hostile takeover attempt. The government
would also provide the Lufthansa Group with 3 billion euros ($3.3 billion) in
The Lufthansa executive team agreed to the rescue package on
Monday following weeks of negotiations with the German Economic Stabilization
In a statement Thursday, a European Commission spokeswoman
said that the EC has made no decisions on any conditions that it would place on
Lufthansa in exchange for approving the stabilization package. The spokeswoman
added, however, that the EC requires European Union member states to “make
additional commitments to preserve effective competition in the markets in case
of large recapitalizations of more than 250 million euros to a company.”
Reuters reported that terms put forward by the EC include
Lufthansa relinquishing a combined 72 daily landing and departure slots at its
Frankfurt and Munich hubs. Lufthansa, citing an anonymous source, wanted to
take back the slots after repaying state aid, while the EC wanted the
concessions to be permanent, Reuters reported.
The aid package faces sharp opposition from Ryanair,
Europe’s largest low-cost carrier. In a statement Thursday, Ryanair Group CEO
Michael O’Leary said the package would distort competition in the German market
for years to come. He called on German Chancellor Angela Merkel to abandon the
rescue package and to instead eliminate air travel taxes for all airlines
operating in Germany for 24 months.
“It’s time for Mrs. Merkel to tell Lufthansa to buzz off and
bring an end to these illegal state aid demands from the subsidy junkie
Lufthansa,” O’Leary said.
Lufthansa Group includes the airlines Lufthansa, Swiss,
Austrian, Brussels and Eurowings.