Ryanair to challenge Lufthansa’s bailout

Employees of German carrier Lufthansa stand with a face mask in front of the Lufthansa Aviation Center at the international airport in Frankfurt am Main, Germany, 25 June 2020. The joint venture SunExpress will be shut down and some 1,200 jobs are to be axed. According to media reports, the German government and Lufthansa have reached an agreement on a bailout rescue package. Lufthansa Group shareholders are to decide on 25 June 2020 at a Annual General Meeting, whether to accept the government rescue package for the group. EPA-EFE/RONALD WITTEK

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Europe’s biggest budget airline Ryanair will challenge the European Commission’s approval of German rival Lufthansa’s bailout, a senior Ryanair executive said on Thursday.

“It (Lufthansa) needs it as a war chest to fight off competition, it doesn’t need it to survive,” Juliusz Gomorek, Ryanair’s chief legal officer told reporters.

Ryanair has already appealed to the Luxembourg-based General Court against aid granted by France, Denmark and Sweden to airlines and cleared by EU competition enforcers.

Lufthansa shares jumped around 15% on Thursday after its top shareholder dropped his objections to a 9 billion euro ($10 billion) government bailout for the German airline brought to the brink of collapse by the COVID-19 pandemic.

“I will vote for the proposal,” billionaire investor Heinz Hermann Thiele, who recently increased his stake in Lufthansa to 15.5%, told the Frankfurter Allgemeine daily on Wednesday.

His endorsement amounts to an 11th-hour reprieve for Germany’s flagship airline after fears had swirled he might veto the proposed rescue, which will see the government take a 20% stake and board seats, diluting existing shareholdings.

Shareholders are due to vote on the plan later on Thursday at a meeting held online due to the pandemic. Thiele has a virtual veto, as only 38% of shareholders have registered to vote.

Thiele’s backing will come as a relief to Chancellor Angela Merkel, who could ill afford another high-profile business collapse following the failure of payments firm Wirecard.

Lufthansa, which traces its roots back almost a century, employs around 138,000 people and owns brands including Eurowings and Austrian Airlines.

It has been brought to its knees by COVID-19 and what promises to be a protracted travel slump, and like many rivals across the world, sought state help to stay afloat. Even after Thursday’s gains, its shares are down almost 40% this year.

Also on Thursday, European Union regulators approved Lufthansa’s 6 billion euro recapitalisation, part of the bailout deal, subject to a ban on dividends, share buybacks and some acquisitions until state support is repaid.

Concerned a government stake would make it harder for Lufthansa to make tough decisions about restructuring and job cuts, Thiele had instead proposed an indirect government holding in the airline via Germany’s KfW development bank.

That sparked fears the bailout would fail and Lufthansa would have to seek protection from creditors within days.

Via Reuters

Via Reuters

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