Why is Lufthansa unable to approve the German state rescue deal?

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Lufthansa Unable to Approve German State Rescue Deal Due to EU Conditions

Lufthansa's supervisory board has been unable to approve a €9 billion German state rescue package primarily due to concerns over potentially stringent conditions imposed by the EU Commission. These conditions are feared to weaken the crucial hub functions at Lufthansa's home airports in Frankfurt and Munich, prompting an intensive analysis before any decision can be made. The airline group, which also encompasses Brussels Airlines, Austrian Airlines, and Swiss, is currently facing significant financial strain, losing €1 million per hour with approximately 90% of its fleet grounded due to the ongoing pandemic.
Concerns Over EU Commission's Demands

The central obstacle to approving the rescue package lies in the conditions indicated by the EU Commission. Lufthansa's statement suggests that these stipulations could compromise the operational integrity and strategic importance of its primary hubs in Frankfurt and Munich. The airline group stated that these conditions require thorough examination, indicating a significant divergence between the proposed rescue terms and the company's operational needs and structure.
Potential Concessions on Airport Slots

Reports suggest that Brussels competition watchdogs may demand significant concessions, including valuable takeoff and landing slots at Lufthansa's Frankfurt and Munich hubs. Such a demand could fundamentally alter the competitive landscape and Lufthansa's established operational advantages, leading to concerns about a weakening of its hub function. This potential requirement has become a major point of contention in the negotiation process.
Financial Strain and Rescue Package Details

The urgency for a rescue is underscored by Lufthansa's severe financial situation, hemorrhaging €1 million every hour with most of its fleet inactive. The proposed stabilization package aimed to address this by having the German state acquire a 20% stake, with an option for an additional 5% plus one share to prevent hostile takeovers. This would involve €5.7 billion in new capital and a €3 billion loan from the state-owned development bank KfW.
Competitive Landscape and Opposition

The proposed state aid has already drawn criticism from competitors, with Ryanair's CEO labelling the deal as "illegal state aid" that distorts competition. Unions have also expressed concerns, suggesting that any gaps left by a Lufthansa retreat could be filled by "dumping providers" like Ryanair, which they argue do not operate in a socially fair or sustainable manner. The potential impact on fair competition is a significant element of the ongoing discussions.

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Why is Lufthansa unable to approve the German state rescue deal?

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