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 analyzed intensively.”

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 loans.

The Lufthansa executive team agreed to the rescue package on Monday following weeks of negotiations with the German Economic Stabilization Fund. 

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.


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