On Monday, July 8, 2024, the European Commission announced the commencement of an in-depth investigation into the German government's six-billion-euro recapitalization plan for the airline Lufthansa. This follows the annulment of the aid by the European Union's General Court last year. The investigation aims to verify whether the aid complies with EU state aid rules. In June 2020, the Commission had approved Lufthansa's recapitalization plan, deeming it in line with EU regulations.
The approval occurred within the context of the Covid-19 pandemic, which activated a temporary framework on state aid to relax public support rules and allow member states to provide greater assistance to businesses affected by the crisis. However, in May 2023, the EU Court of Justice annulled the six-billion-euro measure, though the Union's judiciary has not yet ruled on Lufthansa's appeal.
The approved recapitalization plan was structured in three components: an equity participation of approximately 300 million euros, a non-convertible silent participation of 4.7 billion euros, and a silent participation of one billion euros with convertible bond characteristics. To access the aid, Lufthansa had to adhere to several conditions, including a ban on dividend distribution and strict limitations on executive remuneration, including bonuses. Additionally, the airline had to surrender up to 24 landing and takeoff slots per day at Frankfurt and Munich airports to facilitate the entry of competitor airlines.
The EU General Court's ruling that annulled the Commission's approval of the recapitalization plan found that the German support violated several conditions set out in the temporary state aid framework. Following this decision, Brussels will conduct a "more thorough" investigation to assess whether the recapitalization measure is justified and if a mechanism is necessary to incentivize the state's exit from Lufthansa's capital. The investigation will also examine whether Lufthansa holds a "significant market power" at airports other than Frankfurt and Munich, such as Düsseldorf and Vienna, and evaluate certain aspects of the structural commitments imposed on the airline.
