European justice cancels the company’s rescue plan

2023-05-10 11:37:00

The recapitalization of Lufthansa by Germany, in the amount of 6 billion euros, was intended to save the airline affected by the Covid-19 pandemic.

By LL with AFP

The German state thus sold in September the last shares it still held in the capital of Lufthansa, where it had entered up to 20% in 2020.
© URBANANDSPORT / NurPhoto / NurPhoto via AFP

Published on 05/10/2023 at 11:37 am

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Lhe European Union court of first instance on Tuesday overturned a €6 billion recapitalization of Lufthansa by Germany to save the company during the Covid-19 pandemic.

The European Commission, which had validated the plan, “made several errors”, including that of considering that Lufthansa “was unable to finance itself on the markets” to meet its needs, the court said in a press release.

The concrete impact of this judgement, which can still be appealed, remains however uncertain. Because the aid mechanism for the German airline, which had seen the German state enter its capital in exchange for fresh money, has already been implemented.

The German state thus sold in September the last shares it still held in the capital of Lufthansa, where it had entered up to 20% in 2020.

The company is therefore once again entirely in the hands of private shareholders. Lufthansa “will analyze the verdict and then decide how to proceed,” the group responded in a statement sent to AFP.

An appeal to the European Court of Justice?

The carrier recalls that it has already “fully repaid the stabilization measures approved by the European Commission as well as approximately 92 million euros in interest”.

The Brussels executive, which has not yet reacted, can appeal against this decision before the European Court of Justice, judge of last instance.

The Court had been seized by the low-cost airlines Ryanair and Condor, who wanted to have the Commission’s decision annulled.

Severe restrictions on the aviation sector during the Covid-19 pandemic had almost paralyzed Lufthansa’s activities, putting it on the brink.

European judges ruled on Wednesday that the Commission had failed to require a “mechanism to encourage Lufthansa to buy out Germany’s participation as soon as possible”.

Ryanair also criticized the Commission for not having provided for a mechanism to increase the remuneration of the German State as long as it was a shareholder of Lufthansa.

On the Frankfurt Stock Exchange, the decision made little wave, the Lufthansa title evolving in equilibrium.