Lufthansa Stabbed In The Back By The EU in €9B Bailout That Makes The Deal Offered Untenable


The board of Lufthansa were expected to sign off an aid agreement structured by the EU, until they woke up to the realisation that the EU were attempting to take them for a ride, and were in fact an ingenious group of greedy bureaucrats ready to cripple the German airline in return for a desperately needed $9 Billion bailout. They have duly rejected the EU’s offer.

The deal required Lufthansa to give up take off and landing slots at major airports Frankfurt and Munich. This is practically the bread and butter of Lufthansa which commands over 66% market share. Though desperate Lufthansa understands that this may be the only viable route to avoid insolvency. However they also appreciate that weakening their strong position will further weaken their ability to repay the loan and still go under in a short period of time.

72 slots are to be forfeited used by 12 of 300 jets based at the two airports. Lufthansa was aiming for keeping their slots and repaying the loan, where the EU wanted permanent concessions.

Air travel has ground to a near halt as a result of the global pandemic and many airlines are seeking aid to stay afloat. Air France-KLM and many US carriers. The bailout deal was envisioned to give the German government 20% of Lufthansa for 6 billion euro combined with a state backed loan of 3 billion euro.

Meanwhile cries from competitors can be heard in the form of Ryanair’s Chief Executive Micheal O’Leary who claims the deal will distort competition in the German market for the next five years. He went on further to state “It is deeply ironic that the German government, which lectures all other EU countries about respecting EU rules, has no difficulty breaking the State Aid rules when it comes to Lufthansa,”

Now that the Lufthansa board has made its decision clear the EU will need to renegotiate if they are interested in resubmitting a rescue package that is deemed fair.


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