Lufthansa Secures €9 Billion Bailout from German Government and EU Commission
Lufthansa granted immediate access to a large-scale loan worth billions of dollars
In a significant move to stabilize the airline industry during the COVID-19 pandemic, Lufthansa has secured a €9 billion bailout from the German federal government and the European Union (EU) Commission.
The Crisis and Government Intervention
The pandemic had a devastating impact on Lufthansa, with the airline losing approximately €1 million per hour in April 2020[1]. In response, the German government stepped in with a rescue package to help the struggling airline. The decision was likely driven by the need to stabilize the economy, protect jobs, and maintain a strong national airline.
Shareholder Agreement and EU Commission Approval
The bailout was conditioned on shareholder approval, which was granted on June 25, 2020. As part of the agreement, the German government acquired a 20% stake in Lufthansa[1]. The EU Commission played a crucial role in the process by approving the bailout under the EU's state aid rules. These rules allow member states to provide temporary state aid to companies during exceptional circumstances.
Conditions and Monitoring
The EU Commission imposed conditions to ensure that the aid was used appropriately and that Lufthansa implemented restructuring measures to become viable again. The specifics of these conditions are not detailed in the available sources.
Coordination with the EU Commission
It was communicated that a six billion euro mass loan had already been coordinated with the EU Commission. If a protective shield procedure had ensued, the federal government was prepared to announce a mass loan of six billion euros immediately.
Disbursement of Funds
The federal government has made a portion of the nine billion euro rescue package immediately available to Lufthansa. While the specifics of the €3 billion disbursement are not detailed, any such disbursement would have been part of the larger bailout package approved by the EU Commission.
The extraordinary general meeting approved the agreement between the state and Lufthansa on Thursday evening. A photograph of a Lufthansa aircraft at the airport was published by the dts News Agency.
This bailout marks a crucial step in supporting Lufthansa during these challenging times and helping the airline industry recover from the impact of the COVID-19 pandemic.
[1] Source: Der Spiegel
Economic and social policy played a significant role in the government's intervention to secure a €9 billion bailout for Lufthansa, with the aim of stabilizing the economy, protecting jobs, and maintaining a strong national industry. The finance ministry collaborated with the EU Commission to coordinate the bailout, ensuring it was consistent with EU state aid rules.
