Billions from the state

EU Commission investigates Lufthansa corona aid

Germany, Austria, Switzerland and Belgium had pledged a total of nine billion euros in aid to the Lufthansa Group during the coronavirus pandemic.

(Bild: AP)

During the coronavirus pandemic, Lufthansa received billions in aid payments from the German state, which the European Court of Justice (ECJ) declared unlawful. The EU Commission is now re-examining its approval.

The aim is to clarify whether the aid was in line with European state aid rules. The background to the investigation is a court ruling from just over a year ago.

At that time, the ECJ ruled that the EU Commission should not have approved the aid of around six billion euros for AUA parent company Lufthansa. The Commission had made several errors in its assessment and the EU Court of Justice (ECJ) had therefore declared the Commission's approval null and void.

Market power underestimated?
The competition authorities should have examined more closely whether Lufthansa still had its own collateral to obtain loans for itself. The court also criticized the fact that Lufthansa's market power at the airports was underestimated.

The Commission is now re-examining its decision and wants to take into account Lufthansa's market power at the airports in Vienna and Düsseldorf, for example. However, the authority emphasizes that the initiation of an investigation does not yet say anything about its outcome.

Pandemic brought business to a standstill
The travel restrictions during the pandemic had brought Lufthansa's business to a virtual standstill. Tens of thousands of jobs were on the line at the Group, which employs around 138,000 people. This is why the German government supported Germany's largest airline in spring 2020.

Germany, Austria, Switzerland and Belgium had pledged a total of nine billion euros in aid to the Lufthansa Group, but this was not fully utilized. The lion's share of the sum came from Germany, the airline's home country.

Six billion euros, including a 20 per cent share package and silent partnerships, were provided by the federal Economic Stabilization Fund (WSF), while the German state-owned KfW Bank contributed a loan of one billion euros. The European partners only joined the aid pact at a later date.

Aid to be repaid by the end of 2022
The rescued group had repaid the aid in full by the end of 2022 and partly replaced it with its own debt. Lufthansa CEO Carsten Spohr explained that he would rather be indebted to the market than to the taxpayer. On balance, the German state made a nominal profit of around 760 million euros from interest and share sales.