Lufthansa agrees to give up airport slots for $9.7bn bailout

Lufthansa has agreed on a compromise with the German government and the European Union on the way towards final approval of a nine-billion-euro ($9.7bn) bailout deal.

The German airline said in a statement on Saturday its supervisory board had decided to accept the deal worked out between negotiators for Berlin and the EU Commission which involves the giving up several slots at Frankfurt and Munich airports.

Late on Friday, government sources told DPA news agency the German government had also agreed to the compromise.

Lufthansa said the scope of commitments required of it by the EU Commission had been reduced compared with initial plans.

The company must remove up to four of its aircraft from Frankfurt and Munich airports to allow competitors to take those slots, which means giving up three takeoff and three landing rights per aircraft a day, according to Lufthansa.

The vacated slots are reportedly only available to new competitors at Frankfurt and Munich airports for at least 18 months.

If no new competitor makes use of the opportunity, it will also be extended to existing competitors at the respective airports.

The slots are to be allocated as part of a bidding process – and only to be taken over by a European competitor who has not received any significant state recapitalisation due to the coronavirus pandemic.

The EU said the compromise reflects commitments from Germany and Lufthansa “to preserve effective competition”.

“This would enable a viable entry or expansion of activities by other airlines at these airports to the benefit of consumers and effective competition,” a spokesperson for the EU said on Saturday morning.

Approvals pending

Lufthansa’s supervisory board has to approve the rescue package including these requirements, called for by the European Commission’s competition watchdog.

The company then plans to convene an extraordinary general meeting promptly to obtain shareholder approval for the package.

The $9.7bn bailout deal provides for aid and equity measures for the ailing carrier.

In addition to full approval from Lufthansa’s supervisory board, the European Commission’s competition watchdog still also needs to sign off.

Germany’s economy ministry also pointed out that the bailout has not had final approval yet.

“In addition, talks with the EU Commission on state aid approval are ongoing,” the ministry said in a statement on Saturday morning.

Lufthansa is Europe’s second-largest airline by passenger numbers. It was profitable before the pandemic grounded about 90 percent of its planes. At one point during the health crisis, the company was losing about 800 million euros ($888m) per month.

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