EU opens investigation into $6.5 billion COVID-19 state aid granted to Lufthansa

The European Union (EU) Commission has opened an “in-depth’ investigation into German state aid granted to Lufthansa during the COVID-19 pandemic.  

While Lufthansa has already fully repaid the funding, the commission announced on July 8, 2024, that is would “assess whether a German recapitalization measure” of €6 billion ($6.5 billion) fell within EU state aid rules.  

“The German aid measure consisted of an equity component of €306 million and two hybrid instrument components, namely, Silent Participation I of €4.7 billion with features of a non-convertible equity instrument, and Silent Participation II €1 billion with features of a convertible debt instrument,’ the EU Commission said in a statement.  

On June 25, 2020, as the pandemic spread across the world, like many businesses, Lufthansa was granted aid under the COVID Temporary Framework, but the measure was subsequently annulled by the General Court on May 10, 2023. An appeal submitted by Lufthansa is still pending. 

The General Court considered that the recapitalization measure granted to Lufthansa did not meet several of the conditions set out in the COVID Temporary Framework. 

Included in the EU Commission investigation will be whether Lufthansa was eligible for the aid it received.  

In a statement to AeroTime, Lufthansa confirmed it had “fully repaid the stabilization measures” and around €92 million ($99 million) in interest early. 

“The two silent participations of the Economic Stabilization Fund (WSF) were repaid in October and November 2021. In September 2022, the WSF sold its shares in Deutsche Lufthansa AG acquired as part of the stabilization at a total profit of EUR 760 million. The stabilization was thus already fully completed before the ruling of the European Court of Justice last year,” a Lufthansa spokesperson said in a statement. 

The Lufthansa Group previously stated in 2023 that it expects the commission to open an investigation, as has happened in similar cases. 

EU clears path for Lufthansa’s $350 million takeover of ITA, conditions apply 

AirlinesbyIan Molyneaux2024-07-03

The post EU opens investigation into $6.5 billion COVID-19 state aid granted to Lufthansa appeared first on AeroTime.

Go to Source