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9-Jul-2024 10:26 AM

European Commission opens investigation into EUR6bn German aid for Lufthansa

European Commission (EC) opened (08-Jul-2024) an in depth investigation to assess whether a German recapitalisation measure of EUR6 billion in favour of Deutsche Lufthansa AG is in line with EU state aid rules. The measure was initially approved by the EC on 25-Jun-2020 under the state aid COVID-19 temporary framework, but was annulled by the General Court on 10-May-2023, which considered the measure did not meet several of the conditions set out in the framework. The aid measure comprised an equity component of EUR306 million and two hybrid instrument components, comprising Silent Participation I of EUR4.7 billion with features of a non-convertible equity instrument and Silent Participation II EUR1 billion with features of a convertible debt instrument. The EC's investigation will focus on the following:

  • The eligibility of Lufthansa for the aid;
  • The need for a 'step-up' or similar mechanism to incentivise the exit of the state from the capital;
  • The price of the shares at the time of a potential conversion of Silent Participation II into equity;
  • The existence of significant market power at airports other than Frankfurt and Munich, at least at Düsseldorf and Vienna airports;
  • Certain aspects of the structural commitments imposed on Lufthansa. [more - original PR]

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