Lufthansa (LHAB) (LHA) refused the conditions of the €9 billion rescue plan by the German state after the European Union requested that the group surrender slots in its two main bases, in Frankfurt and Munich.

On May 25, 2020, the Federal Economic Stabilization Fund (WSF) and Lufthansa (LHAB) (LHA) reached a provisional agreement that would see the former taking 20% of the airline’s capital through silent participations. While they consider the German rescue plan as the “only viable option” to preserve the cash of the company, the directors of Lufthansa (LHAB) (LHA) have postponed the formal agreement until further notice. 

The supervisory board is indeed worried that the conditions imposed by the European Commission, which requested for Lufthansa (LHAB) (LHA) to cede some of its slots in Frankfurt and Munich airports, and to reduce the number of planes based in Germany could have serious “economic consequences” for the airline. The board will now consider “alternative solutions”.

Lufthansa and the German government reached an agreement on a €9 billion rescue plan. The state would acquire 20% of the capital of the airline giant, thus becoming its main shareholder. But to ensure fair competition, the European Commission might come after some of Lufthansa’s most prized assets.

Lufthansa’s (LHAB) (LHA) labor unions also shared their concerns over the surrender of slots. They fear that the place left empty would be replaced by low-cost competitors that would resort to "social dumping".

Time is precious, however, as the company loses €1 million per hour. The airline launched a restructuring aimed at reducing the fleet by 100 planes, threatening around 10,000 jobs. Lufthansa (LHAB) (LHA) currently employs around 138,000 people.

Ryanair could challenge the bailout that it deems unfair. “Ryanair will appeal against this latest example of illegal State Aid to Lufthansa (LHAB) (LHA) , which will massively distort competition and level playing field into the provision of flights to and from Germany for the next 5 years,” Michael O’Leary, Ryanair CEO said.

The feud between Lufthansa and Ryanair is seemingly not coming to an end anytime soon. As the German airline group received a $9.8 billion state aid package from the German government, Ryanair's chief executive Michael O'Leary was highly critical of the affair.