Feud continues: Ryanair to appeal Lufthansa $9.8B state aid

The feud between Ryanair and Lufthansa (LHAB) (LHA) , ever since the latter acquired Air Berlin (AB1) ‘s aircraft, slots and personnel, has gotten only spicier and spicier as time went on and the two sides directly butted heads in the domestic German market.

The latest instigator of the feud was the completed negotiations between the German government and Lufthansa (LHAB) (LHA) , as the airline group agreed upon a deal that would lift their cash reserves by $9.8 billion (€9 billion). In exchange, the German government would get a 20% stake in the company, in addition to two seats on Lufthansa’s (LHAB) (LHA) supervisory board.

While the deal is yet to be approved by the company’s management and supervisory boards, it is already gathering a storm over the skies of Europe. Prior to Lufthansa (LHAB) (LHA) admitting that it was in active talks with the German Economic Stabilization Fund (WSF) regarding more state aid, the rumor mill had already been in full effect.

Michael O’Leary had jumped on the latest developments and called the German airline group a “crack cocaine junkie” as he questioned why Lufthansa (LHAB) (LHA) needed more aid. O’Leary had accused that the additional funds would be used to buy competing airlines in Europe after the crisis.

Now, as Lufthansa (LHAB) (LHA) announced that negotiations were concluded, the chief executive of the low-cost carrier jumped on the opportunity and once again called the German airline a state aid addict.

“Whenever there is a crisis, Lufthansa’s (LHAB) (LHA) first reflex is to put its hand in the German Government’s pocket.”

Unfair pricing and competition

O’Leary questioned how low-cost carriers like his own two companies, namely Ryanair and Laudamotion, and easyJet can compete with Lufthansa (LHAB) (LHA) when it “has $9.8 billion (€9 billion) worth of German Govt subsidies to allow it to engage in below-cost selling or buy up even more competition for the next number of years.”

“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.”

The state aid is still not approved by the European Commission. The European legislators want Lufthansa (LHAB) (LHA) to give up slots in Frankfurt Airport (FRA) and Munich International Airport (MUC), two main German hubs of the airline. Furthermore, the airline group would be forced to reduce the number of aircraft based in Germany.

This is not the first time that the two sides have called each other out on their pricing policies. In July 2019, the chief executive of Lufthansa (LHAB) (LHA) called Ryanair’s pricing strategy “economically, ecologically and politically irresponsible.”

In return, Ryanair responded with a banner on their German website that stated “You will find cheap flights at prices that Lufthansa (LHAB) (LHA) cannot offer.”


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