Lufthansa state aid secured as Ryanair & Wizz Air competition grows

Lufthansa gained shareholder approval for the EUR9 billion state aid package negotiated with Germany at a meeting on 25-Jun-2020. It had threatened applying for protection under insolvency law if the bailout was rejected when it feared approval could be in doubt.

Lufthansa may have assured its survival, but challenges are building. The vote came as Ryanair Group plans an aggressive return of capacity into Germany (where its seat count is to jump by 320% from the end of Jun-2020 to the start of Jul-2020). In addition, Wizz Air may consider new bases in Germany.

The two ultra-LCC groups are also leading competitors to Lufthansa Group's Austrian Airlines in Vienna. Here, Ryanair is rearranging group airlines to demote Laudamotion in favour of Ryanair and its Malta Air subsidiary (which is also operating a chunk of the group's German restart).

The threat of insolvency proved sufficient to spur Lufthansa shareholders to attend the meeting and back the bailout. Nevertheless, the fact that Lufthansa felt the need to issue such a statement is another sign of the extraordinary challenges faced by it and airlines everywhere.