Lufthansa lost its fight at the European Union’s top court over the legality of its €6 billion German recapitalization at the height of the Covid-19 pandemic.
The Court of Justice said Thursday it backed a lower tribunal’s ruling to annul the European Commission’s decision to approve Germany’s recapitalisation of the airline.
The rulings support claims by Ryanair Holdings Plc and Condor that the state aid unfairly tilted competition toward Lufthansa. The carrier has since paid back its subsidies, limiting the impact of the court defeats.
The 2020 recapitalization package issued by the German government was given the green light by Brussels, in a decision that prompted Lufthansa’s rivals to claim the aid was wrongly approved under temporary state-aid rules targeting industries hamstrung by the pandemic.
The top court’s ruling comes just days ahead of a another loosening of the rules amid the war in Iran. The judgment underscores the tough balancing act faced by regulators keen to help hard-hit firms while avoiding competition distortions.
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It its 2023 decision, the EU’s lower tribunal that said the aid was too favorable to Lufthansa, and requirements that Europe’s biggest network carrier forfeit take-off and landing rights in Frankfurt and Munich didn’t provide a realistic chance for competition.
Following that loss, the Brussels-based commission in 2024 launched its own investigation to determine the legality of its approval decision.
A Lufthansa spokesperson said Thursday it would engage constructively in the commission’s ongoing process and remains in close contact with all relevant institutions.
In total, Lufthansa received some €9 billion of state aid during the pandemic, the bulk of it from Germany, which obtained a 20% stake in the carrier, with contributions from Switzerland, Austria and Belgium.