The EU court rejects the 6 billion state aid: the mine for Lufthansa and the effects on the wedding with Ita

The aid of the German government to Lufthansa in the midst of the Covid pandemic was illegitimate. At least according to the Tribunae Ue which this morning decided to annul the decision with which the European Commission had approved in 2020 the recapitalization of the carrier by Germany, for an amount of 6 billion euros. The decision – taken following an appeal presented by Ryanair – is a cloud that appears on the horizon of the negotiations between the MEF and Lufthansa itself which by 12 May should define the entry of the Germans into the capital of Ita. According to the latest rumors, the carrier should subscribe to a reserved capital increase of approximately 200 million euros to rise to 40% of the capital. The plan subsequently envisages a rise to 51% as soon as the former Alitalia is profitable again, before a definitive exit within 4-5 years.

Meanwhile, the European Commission, according to the sentence issued today by the General Court of the EU Court of Justice, has made various errors, in particular by deeming that Lufthansa was unable to find financing on the markets for all of its needs and by failing to request a mechanism to incentivize Lufthansa to buy back Germany’s stake as quickly as possible. Furthermore, according to the judges, the EU Commission would have made a mistake in denying the existence of a significant market power of Lufthansa in certain airports and in accepting certain commitments which did not guarantee the safeguarding of effective competition on the market.

The German carrier is confident, however, that the judgment will be overturned on appeal also because an initial capital increase of 2.4 billion euros was approved in 2021 to repay the first tranche of loans obtained from the state (at a rate of 4 %). Furthermore, Germany underwrote the commitment to exit the carrier’s ownership as soon as the loan was repaid.

Although the decision of the Luxembourg court came two days after the expiry of the negotiations between Frankfurt and the Mef for the carrier’s entry into the capital of Ita, there shouldn’t be any negative effects on the operation.

And just yesterday, speaking to shareholders during the annual meeting, the CEO of Lufthansa, Carsten Spohr reiterated how “the diversity of our airline group is not a weakness”, it is indeed a strategic factor for success and the acquisition of Ita it is «the further development of this strategy». If the deal is successful, Ita Airways will be Lufthansa’s twelfth brand.