Germany reaches EU deal on $9.9b Lufthansa bailout

Bloomberg

The German government settled a dispute with the European Commission over a 9 billion-euro ($9.9 billion) bailout of Deutsche Lufthansa AG, clearing the way for the carrier to accept the rescue package.
After intensive talks, the commission and the German government agreed that Lufthansa will reduce the number of aircraft it keeps at Frankfurt and Munich airports. Lufthansa in a statement said it would surrender up to 24 takeoff and landing slots, making room for new competitors at each hub.
The compromise wraps up a nail-biter of a week with Lufthansa’s future in the balance.
Germany offered Lufthansa a package of loans and equity investment to keep the carrier aloft through the coronavirus storm. But after the EU demanded it give up slots in Munich and Frankfurt, the airline’s supervisory board unexpectedly held off on accepting this lifeline — throwing the rescue plan into turmoil after weeks of talks.
Lufthansa said that the deal, which still requires approval of its supervisory board, reflects a reduction in the initial demands from the EU. The airline will have to cut back four aircraft each at Frankfurt and Munich, surrendering 24 daily slots — equivalent to three takeoff-and-landing pairs for each plane, the statement said.
For an initial 18-month period, the slots can only be allocated to one new competitor each at Frankfurt and Munich. After that, they can be made available to rivals already present at the airports. The capacity will be allocated in a bidding process, Lufthansa said, and only be available to European carriers that haven’t received substantial state recapitalisation due to the coronavirus pandemic.
The commitments will “enable a viable entry or expansion of activities by other airlines at these airports to the benefit of consumers and effective competition,” the European Commission said in an emailed statement.
Regulators will assess the German aid package “as a matter of priority” before it can grant final approval, the EU said. The authority polices state aid rules to ensure one EU country doesn’t give its companies an unfair advantage over others in the bloc. Of the two main European discount carriers, Lufthansa rival Ryanair Holdings Plc already has slots at Frankfurt airport. A spokeswoman for Germany’s economy ministry said an important milestone had been reached, adding talks with the EU over other aspects of the deal would continue.
Like airlines across the world, Lufthansa is fighting for survival as the coronavirus crisis punctures a decades-long aviation boom.