EU Commission reviews corona aid for Lufthansa
The EU approved the bailout of Lufthansa during the Corona-Pandemic with state aid under certain conditions. The Commission is now conducting a detailed review in 2023. Could Kranich-Airline have obtained loans elsewhere?
The EU Commission is leading an investigation into the billions in state aid granted to Lufthansa during the Corona-Pandemic. The purpose of this examination is to determine if the aid was in line with European state aid regulations.
The background of the investigation is a judgment by the European Court of Justice from about a year ago. The judges in Luxembourg had ruled that the EU Commission could not have approved the aid in the amount of approximately six billion Euros. The EU Commission had made several errors in their evaluation, and the European Court declared their approval invalid.
The Competition Authorities Should Have Examined More Closely
The competition authorities should have examined more closely whether Lufthansa still had its own securities to obtain loans. The court also criticized that the market power of Lufthansa at the airports was underestimated.
Now, the Commission is re-examining its decision and will consider the market power of Lufthansa at the airports in Vienna and Düsseldorf. The agency emphasizes that the initiation of an investigation does not yet indicate its results.
The travel restrictions during the pandemic had almost brought Lufthansa's business to a standstill. With around 138,000 employees, the company faced the loss of thousands of jobs. Therefore, the German government supported the largest German airline in the spring of 2020.
State Aid Completely Repaid
Germany, Austria, Switzerland, and Belgium collectively pledged nine billion Euros in aid to the Lufthansa Group, but not all of it was fully drawn. The largest share of the sum came from Germany, Lufthansa's home country. Six billion Euros, including a 20% equity stake and silent participations, came from the federal-owned Economic Stabilization Fund (WSF), while the state-owned KfW Bank contributed a billion Euros in loans. The European partners joined the aid package at a later stage.
The rescued company had fully repaid the aid by the end of 2022 and partly replaced it with its own debts. Lufthansa CEO Carsten Spohr stated that the company was better off being in debt on the market than with the taxpayer. The German state did not lose any money under the table but instead made a profit of around 760 million Euros from interest and stock sales.
The Federal Government played a significant role in supporting Lufthansa during the Corona crisis by providing state aid through the Economic Stabilization Fund (WSF). Despite the economic challenges faced by the airline industry, several airlines, including Lufthansa, have been under scrutiny for potential violations of European state aid regulations.
