Lufthansa Appeals European Court Ruling on State Aid
Lufthansa (LH), headquartered in Frankfurt International, is contesting the annulment of its EUR 6 billion euro (approximately USD 6.6 billion) state aid granted by the European Commission in 2020 under Covid-19-related state aid rules.
The German airline has lodged an appeal with the European Union Court of Justice against the May 2023 decision by the lower EU General Court (case C-457/23 P). The General Court ruled in favor of competitors Ryanair (FR) of Dublin International and Condor (DE) of Frankfurt International, who had raised concerns on antitrust grounds. The court found that Lufthansa had received the state aid in error and could have raised a portion of the recapitalization through the market. It also noted that the aid did not include a mandatory incentive for a swift repayment.
Nevertheless, by November 12, 2021, Lufthansa had already repaid EUR 3.5 billion of the government stabilisation funds and canceled the remaining amount. This included EUR 2.5 billion (approximately USD 2.7 billion) from Germany’s Covid-linked Economic Stabilisation Fund (ESF) and a EUR 1 billion (approximately USD 1.2 billion) loan from KfW IPEX-Bank (Kreditanstalt für Wiederaufbau).
A spokeswoman for Lufthansa confirmed the appeal and stated that the company had fully repaid the stabilisation measures approved by the European Commission, along with approximately EUR 92 million (approximately USD 101 million) in interest rates. The “silent participations” of the Economic Stabilisation Fund were repaid in October and November 2021. Furthermore, the ESF sold its shares in Deutsche Lufthansa AG, acquired as part of the stabilisation, for a total gain of EUR 760 million (approximately USD 841 million). Thus, the stabilisation process was completed before the court ruling.
The German government initially provided measures and loans up to EUR 9 billion (approximately USD 9.9 billion), of which Lufthansa utilized around EUR 3.8 billion (approximately USD 4.2 billion). This amount includes around EUR 306 million (approximately USD 338 million) through which the ESF increased its shareholding in Deutsche Lufthansa AG.
To refinance existing liabilities and the state aid, Lufthansa resorted to various debt and equity financing measures later in 2020. The company made a “comeback” on the capital markets in November of the same year, issuing a convertible bond of EUR 600 million (approximately USD 664 million) and a corporate bond of EUR 1 billion (approximately USD 1.2 billion).