The supervisory board of the Lufthansa Group has approved a $9.9 billion rescue package from the German federal government. The move came five days after board had rejected the aid due to conditions that were to be imposed by the European Commission. 

Monday’s board approval followed Luthansa’s announcement Saturday that it had reached what it considered to be a less onerous arrangement with the European Commission. 

The package will now be put before Lufthansa Group shareholders on June 25. Approval is necessary to secure the solvency of the airline group, said the company. 

Lufthansa Group, which has been financially ravaged by the Covid-19 pandemic, includes the airlines Lufthansa, Swiss, Austrian, Brussels and Eurowings.

Lufthansa said that under the conditions accepted by the supervisory board Monday, the carrier would be obligated to transfer up to 24 daily takeoff and landing slots each at its Frankfurt and Munich hubs. The slots would go to one competitor at each airport. Those slots would be available only to new competitors for the first 18 months. If no carrier takes the slots during that time, they would be available to existing competitors. 

Lufthansa said that the slots, which would be allocated in a bidding process, could only be taken over by a European competitor that has not itself received any substantial state recapitalization as a result of the Covid-19 pandemic -- a condition that would presumably eliminate low-cost powerhouse EasyJet, since it has secured a 600 million pound loan from the U.K.

Ryanair, another key intra-Europe low-cost competitor, would be eligible for the slots in Munich, but not Frankfurt. 

Under the conditions that the Lufthansa supervisory board rejected last week, the carrier would reportedly have been required to relinquish a combined 72 daily landing and departure slots in Frankfurt and Munich. 

Under the package, the German government would invest 5.7 billion euros ($6.3 billion) into the Lufthansa Group in exchange for a 20% equity stake in the company and two positions on its 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.

Lufthansa said it will be meeting with company union leadership in an effort get buy-in. 

“The expected slow market recovery in global air traffic makes an adjustment of our capacities unavoidable,” CEO Carsten Spohr said. “Among other things, we want to discuss with our collective bargaining and social partners how the impact of this development can be softened in the most socially acceptable way possible.”

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