2023-05-10 20:48:00
A Lufthansa Boeing 747 at Frankfurt Airport, Germany, on August 1, 2022 (AFP/Daniel ROLAND)
The Court of First Instance of the European Union on Wednesday canceled two large airline recapitalization plans, that of Lufthansa by Germany and SAS by Denmark and Sweden, to save them during the Covid-19 pandemic.
The European Commission, which had validated Lufthansa’s plan for an amount of 6 billion euros in 2020, “made several errors” in considering that the German company “was unable to finance itself on the markets” for to meet its needs, the Tribunal said in a press release.
The plan of the Scandinavian company, also approved in 2020 by Brussels, concerned just over a billion euros.
These judgments, which can be appealed, follow legal actions, in particular by the low-cost airline Ryanair, which considers itself to be the victim of distortion of competition. However, their impact remains uncertain.
The aid mechanism for the German airline, which had seen the German state enter its capital in exchange for fresh money, has thus already been implemented.
The German state sold in September the last shares it still held in the capital of Lufthansa, where it had entered up to 20% in 2020.
The company is therefore once again entirely in the hands of private shareholders.
Lufthansa “will analyze the verdict and then decide how to proceed,” the group responded in a statement sent to AFP.
The carrier recalls that it has already “fully repaid the stabilization measures approved by the European Commission as well as approximately 92 million euros in interest”.
The European Commission, watchdog for competition in the EU, said it had “taken note” of the Court’s judgment on Lufthansa and reserves other “steps” to be taken without being precise. It can appeal within two months to the European Court of Justice, judge of last instance.
“We are aware of the uncertainty that these judgments generate for the companies concerned and the airline industry as a whole. Although it is too early to give an indication (…), at this stage all options are on the table,” Commission Vice-President Margrethe Vestager said in the evening.
– Impact du Covid –
The Court was seized each time by Ryanair, joined by its competitor Condor in the case of Lufthansa, with the same aim of having the aid awarded by the Commission annulled.
The severe restrictions on the aviation sector during the Covid-19 pandemic had almost paralyzed the activities of Lufthansa and SAS, placing them on the brink.
In their judgment today, the European judges found in particular that the Commission had failed to require a “mechanism inducing Lufthansa to buy out Germany’s participation as soon as possible”.
The Irish company sees the two decisions of the day “a triumph for fair competition and consumers across the EU”, according to a press release.
During the Covid-19 pandemic, “more than 40 billion euros in discriminatory public subsidies were granted” to several European companies – including SAS, Lufthansa, Finnair and Air France – says Ryanair, at the origin of multiple actions before European justice to have them annulled.
Unless stopped by the courts, “this wave of state aid will distort the market for decades”, according to the Irish company.
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