Air traffic EU Commission opens investigation into Lufthansa corona aid

The EU Commission is launching an investigation into the billions in state aid granted to Lufthansa during the coronavirus pandemic. The aim is to clarify whether the aid was in line with European state aid rules.

The background to the investigation is a ruling by the EU Court of Justice from just over a year ago. The judges in Luxembourg had ruled that the EU Commission should not have approved the aid amounting to around six billion euros. The EU Commission had made several errors in its assessment and the EU Court had therefore declared the Commission's approval null and void.

Court: Competition authorities should have examined the case more closely

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 reviewing 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.

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

State aid not fully drawn down - now fully repaid

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

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

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. The German state did not lose any money on the bottom line, but actually made a profit of around 760 million euros from interest and share sales.

SDA