Lufthansa refuses state aid...for now

While negotiations between Lufthansa and the German State, after having dragged on, finally came to a conclusion before yesterday, the airline has finally announced that it needed to think before accepting.

The problem does not seem to come from the conditions imposed by the State, and moreover we think that in terms of counterparts the German airline was doing very well compared to Air France for example.

It would seem that the problem comes rather from the European Union, which would require it to give up some of its slots in Munich and Frankfurt in order to validate the rescue plan under competition law. And it is this point that the German airline wants to evaluate before making a decision.

We are talking about “only” 72 slots, but this seems considerable for an airline that is, admittedly, in a quasi-hegemonic position at its two hubs.

Not much more is known and perhaps the situation in a few hours…or not. But in the meantime we have proof, as we knew, that the management of Lufthansa does not intend to mortgage its future in any way to save its present.

What are the possible outcomes? Knowing that the airline needs this money unless it takes the risk of managing a “self-bankruptcy” allowed by German law and which vaguely resembles the American “Chapter 11”:

– Lufthansa bends, loses slots and takes its package. Quite likely.

– The European Union bends and Lufthansa takes its package. Quite unlikely.

– Lufthansa negotiates its slots even if this has an impact on the package amount. Not impossible but unlikely.

– Lufthansa rejects everything and prefers to carry out its threat of “self-bankruptcy” in order to take control of its own life without being accountable to anyone. At this stage we don’t believe it anymore.

[MAJ] Lufthansa finally managed to negotiate to give only 24 slots instead of 72, a lesser evil. It seems we underestimated their negotiating skills.

Photo : A380 Lufthansa by Tomasz Wozniak via Shutterstock