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Lufthansa hopes for speedy EU nod for bailout: sources

Published 05/26/2020, 09:48 AM
Updated 05/26/2020, 09:50 AM
© Reuters. The spread of the coronavirus disease (COVID-19) in Germany
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By Arno Schuetze and Ilona Wissenbach

FRANKFURT (Reuters) - Lufthansa (DE:LHAG) is hoping for a quick nod from the European Commission for its 9 billion euro ($9.8 billion) bailout agreed on Monday to make sure the cash arrives in time for the company to stay afloat.

"This should be a matter of days", one of the people said.

Lufthansa's supervisory board is expected to meet Wednesday to sign off on the rescue deal and the invitation for an extraordinary shareholder meeting is expected shortly thereafter, the sources said.

Lufthansa's owners need to agree to the bailout, which includes Germany taking a 20% stake in the carrier and the injection of 5.7 billion euros in non-voting capital. The vote is not expected to take place unless the EU has signed off on the rescue deal.

The European Commission has asked Lufthansa to waive landing rights for 6 out of 300 planes altogether at Frankfurt and Munich airports, where Lufthansa has a two-thirds market share.

The number of planes and corresponding numbers of airport slots can differ as planes on short-haul flights may have 5-6 slots a day compared to just one for planes on long-haul.

Lufthansa's total fleet comprises 760 aircraft, although Chief Executive Carsten Spohr has said that 100 will remain grounded due to lower demand following the COVID-19 pandemic.

NordLB analyst Wolfgang Donie said giving up slots amounting to 3 planes per hub would be manageable.

The airport slots could then be given to rival airlines, increasing competition, which the EU does not want to see compromised by state bailouts.

"State aid rule do allow to support the aviation sector while ensuring that competition and consumers are not at a disadvantage", a spokeswoman of the European Commission said, declining to comment on details of the Lufthansa case.

Lufthansa called for fair treatment compared with other bailed-out peers and also declined to comment on specifics.

In a sign that rivals do see Lufthansa getting an unfair advantage, Ryanair Chief Executive Michael O'Leary spoke out on Tuesday.

"Ryanair will appeal against this latest example of illegal state aid to Lufthansa, which will massively distort competition," he said in a statement.

Lufthansa had after weeks of negotiations agreed a deal with Berlin to help it to cope with what is expected to be a protracted travel slump.

© Reuters. The spread of the coronavirus disease (COVID-19) in Germany

German chancellor Angela Merkel said that Germany would fight for remedies not being too stringent, German media reported.

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