Technicians of the German airline Lufthansa work on an aircraft at the airport in Munich, Germany, Tuesday, May 26, 2020. Germany on Monday approved a 9 billion-euro ($9.8 billion) aid package for stricken airline Lufthansa to keep a major employer going through the turbulence of the coronavirus pandemic. (AP Photo/Matthias Schrader)

EU says conditions needed in Lufthansa bailout, seeks deal

May 29, 2020 - 7:41 am
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BRUSSELS (AP) — The EU competition chief said Friday that she is not “creating extra hurdles" for Lufthansa after the airline balked at accepting a 9 billion-euro German government rescue package because of what it said were tough EU conditions.

Margrethe Vestager said that EU rules require bailouts to include measures that would maintain a level playing field. She said they are the same for every company getting more than 250 million euros ($275 million) in rescue capital.

“It’s to be able to balance the situation and to make sure the single market is still working," Vestager told a news conference. "And there is very broad consensus about this."

During the pandemic, the EU has relaxed some of its rules that seek to keep countries from rescuing homegrown companies and providing them with a competitive advantage against foreign ones. Relaxing those rules was meant to help the 27 member countries weather the economic shock triggered by the health crisis.

But Vestager noted that they could not be completely disregarded either, particularly since Lufthansa has a lot of market power in Europe.

“There is a high risk that if you hold market power, that if you are a big impressive company, and that you get a lot of aid, that competition will be disturbed," she said.

Earlier this week, Lufthansa had said that the EU conditions attached to the bailout would lead to “a weakening of the hub function at Lufthansa’s home airports,” amid reports that the EU executive was trying to force the company to give up its prized landing slots at Munich and Frankfurt airports.

“We very often have a discussion about slots when it comes to airlines and competition," Vestager said. "That does not exclude other remedies."

Vestager said the EU wants to find a solution in the Lufthansa case and that the EU Commission remained in close contact with German authorities.

Germany's Economy Minister Peter Altmaier said the aid package is a “sustainable and reasonable” solution to keep the company going. Conditions include the airline not paying a dividend and restrictions on management pay. The package conditions would also let the government block the possibility of an unwanted takeover.

Lufthansa CEO Carsten Spohr told employees April 24 that the company was losing cash at the rate of a million euros ($1.1 million) per hour and that passenger numbers had fallen to 1% of previous levels.

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