*****UPDATE: The carrier’s Supervisory Board has so far been “unable to approve the stabilization package in connection with the EU conditions”. In a statement it said that “They would lead to a weakening of the hub function at Lufthansa’s home airports in Frankfurt and Munich”.
“The resulting economic impact on the company and on the planned repayment of the stabilization measures, as well as possible alternative scenarios, must be analyzed intensively,” the statement continues.
Business Traveller will report further on this as the situation develops.*****
Lufthansa has secured a 9 billion euro bailout from the German government.
The “stabilisation package” means the Economic Stabilisation Fund (WSF) of the Federal Republic of Germany will build a 20 per cent stake in Lufthansa. It will also secure two seats on its supervisory board, though the WSF has undertaken not to exercise its voting rights other than in the event of a takeover bid.
The WSF may also increase its stake to 25 per cent plus one share in the event of a takeover attempt.
The conditions of the bailout do not include any stipulation with regard to environmental targets.
This is in contrast to the bailout for Air France.
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The bailout does, however, impose restrictions on management remuneration.
The stabilisation package is subject to the approval of the European Commission and any competition-related conditions. These may include a requirement from the European Commission with regard to Lufthansa’s slots at Frankfurt and Munich Airport.
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In addition, it is separate from agreements reach with the Swiss government with regards to Swiss, the Austrian government with regard to Austrian Airlines, and the Belgian government with regard to Brussels Airlines.
The bailout is also likely to be subject to a legal challenge from Ryanair.