Lufthansa chief executive Carsten Spohr has admitted that the group’s €9bn bailout package from the German government is larger than what it needs to survive, and is designed to ensure the airline maintains a “global leading position”.
Mr Spohr’s comments come after the European Commission warned against state aid being used to give the group an unfair advantage and strong criticism from low-cost rival Ryanair, which has pledged to launch a legal challenge once the bailout is approved by antitrust authorities.
Margrethe Vestager, the EU’s competition chief, said on Friday there was a “high risk” of market distortion, as she defended Brussels’ demands for Lufthansa to relinquish lucrative slots at Frankfurt and Munich airports.
On Wednesday, after Lufthansa’s supervisory board had accepted the EU’s conditions, Mr Spohr conceded that with €4bn in existing liquidity, the Frankfurt-based group did not need the full €9bn from the administration of Chancellor Angela Merkel.
Asked by the Financial Times if Lufthansa could have got by with less, Mr Spohr said: “Yes, but it was not just about survival.”
He added: “The German government was focused on how Lufthansa can maintain its position as a German global champion, not just how it can avoid insolvency.”
Speaking to analysts earlier, the former pilot said the airline sought a larger sum because “we didn’t want to go to the edge of what we needed”.
“We are Germans, we are boring, we love safety,” he said.
Ryanair chief executive Michael O’Leary said Mr Spohr’s comments confirmed the Irish carrier’s position that the state aid was illegal.
Lufthansa was going to maintain its position as a global brand solely because of its “government’s crack cocaine”, he told the FT, adding that the rescue package “massively distorts the playing field” for European airlines.
Mr O’Leary warned that Ryanair’s legal challenge could drag on for several years, by which stage “untold damage will have been done” to competitors.
In an article for the FT on Wednesday, Mr O’Leary, also cautioned that the EU was waving through state aid for airlines with “no or inadequate conditions attached”.
But Mr Spohr insisted that Lufthansa’s package — the largest corporate bailout in Germany since the start of the Covid-19 crisis — was “very much in line with the size of the company”.
Lufthansa, which includes Austrian, Brussels, Swiss and Eurowings airlines, has also been seeking state aid from other European governments.
The group secured €1.4bn from Switzerland in April, and Mr Spohr revealed that additional state aid from Austria could be forthcoming this week.
Negotiations with the Belgian government, he added, were “a little more complicated”.
Earlier on Wednesday, Lufthansa warned it would be forced to take “far-reaching restructuring measures” to reduce costs over the next few years.
The carrier, which swung to a net loss of more than €2bn in the first quarter, said it was burning through €800m a month, and that the reimbursement of cancelled tickets would continue to be a drag.
Europe’s second-largest airline said subsidiary Brussels Airlines would reduce its workforce by a quarter, while Austrian Airlines would cut staff costs by a fifth.
It did not announce how many jobs would be lost at its core Lufthansa brand, although Mr Spohr has spoken of the group having a surplus of 10,000 staff as it becomes a smaller airline, with at least 100 fewer planes.
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