The German Airline, Lufthansa has approved a €9 billion taxpayer-funded government bailout after accepting to relinquish some of its highly-prized airport slots to rival carriers, a conditions imposed by EU competition authorities.
The German flag carrier first secured the bailout deal last Monday but two days later the Lufthansa supervisory board put the bailout on ice after reviewing details of conditions attached to the deal that would have seen the airline forced to hand over a significant number of takeoff slots at its hubs in Frankfurt and Munich.
Lufthansa on Saturday disclosed that it had managed to strike a deal with European authorities on those conditions and that the supervisory board would now approve the bailout.
The multi-billion Euro stabilization package will see the German government take a 20 per cent stake in the airline, as well as acquiring two seats on the supervisory board. The government will remain a silent partner unless there’s a takeover attempt on the airline.
To address concerns that the bailout will give Lufthansa an unfair advantage over some competitors, the airline has now agreed to give up some takeoff slots in both Frankfurt and Munich. “The scope of the conditions required in the EU Commission’s view has been reduced in comparison with initial indications,” the airline explained in a statement.
Lufthansa will have to hand over 24 take-off and landing slots to one competitor each at both Frankfurt and Munich, who will be allowed to station up to four aircraft at the airports. The slots will only be transferred for a year and a half and are only available to new competitors without a presence in Frankfurt or Munich.
If no competitor steps forward then bidding would open to an existing competitor but only those who had received significant government bailouts.
Yesterday, a group of Lufthansa unions wrote to European antitrust chief Margrethe Vestager pleading with her not to impose conditions on the bailout saying doing so could result in a loss of hundreds of thousands of jobs.
“Neither employees of the Lufthansa Group nor the citizens of Europe will understand if tens of thousands of jobs are lost not because of Covid-19, but because of conditions imposed by the EU Commission,” the open letter read.