The European Commission has launched an investigation to determine whether state aid granted by the German government to Lufthansa during the Covid-19 pandemic breached European Union regulations.
The €6 billion recapitalisation package was approved under the Covid Temporary Framework in June 2020, but was annulled by a ruling of the General Court of the EU in May 2023. Lufthansa’s appeal against this decision is currently pending.
The Commission’s investigation is a response to the court’s ruling, which said there had been errors in the process. The aim is now to clarify whether the financial injections complied with European state aid rules.
The investigation will examine whether Lufthansa was suitable for the significant financial support it received from the German government and will investigate competitive conditions at airports in Germany and Austria.
The aid, amounting to billions of euros, was disbursed in June 2020, during which time the EU temporarily relaxed its strict rules on subsidies to help Member States severely affected by the pandemic.
The European Commission’s top competition regulator is at the forefront of this investigation. The regulator’s assessment will focus on the compliance of the aid with EU competition law and its impact on market competition.
The move is part of the Commission’s broader effort to ensure fair competition and correct any market distortions caused by state subsidies during the pandemic.
The outcome of the investigation could have significant implications for Lufthansa and the wider aviation industry, potentially leading to a reassessment of state aid policies and their application in future crises.
Lufthansa, one of the largest airlines in Europe, received the state aid as a “lifeline” to mitigate the severe financial losses it suffered due to travel restrictions caused by the pandemic.
The German airline has already reimbursed this aid in full, which could limit the immediate impact of the court ruling, which may have an impact on future state aid decisions.
A Lufthansa spokesperson reiterated that the company had already repaid the amount in full and said the company had predicted in its annual report for 2023 that the European Commission would launch a formal investigation, as it has done in similar cases.
