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Deal for state aid

Lufthansa invests another 170 million euros in Brussels Airlines

Negotiations on state aid for Brussels Airlines dragged on for a long time. Now it appears that there is an agreement between the Belgian government and Lufthansa.

Tis Meyer/Planepics.org

Airbus A320 of Brussels Airlines: The negotiations dragged on for many weeks.

First there was an agreement for Swiss in Switzerland, then for Lufthansa in Germany and finally for Austrian Airlines in Austria. Lufthansa and its subsidiaries secured government aid in all three countries. Only the talks with the Belgian government about  Brussels Airlines dragged on and made no progress. But now the knot has been tied.

As reported by the public broadcaster VRT, the Belgian government has reached an agreement with Brussels Airlines and its parent company. According to the agreement, the state will give the airline a loan of 290 million euros, which Brussels must repay by 2026. Meanwhile, Lufthansa has committed itself to a financial injection of 170 million euros. Of that amount, 70 million euros will to go towards restructuring, the rest of the money is to be used for financial consolidation.

Belgian government receives lien

Lufthansa guarantees that the money from the loan will remain with Brussels and will not be passed on to Lufthansa or any other company in the Group. The government also receives a lien: if Brussels Airlines is not able to repay the loan, Lufthansa shares in Brussels Airlines will go to the government, it is said.

The agreement also stipulates the continued existence of the Brussels Airlines brand and headquarters in Brussels. The airline will therefore continue to operate under a Belgian licence and Lufthansa will invest in operations at Brussels airport. The entire agreement has been submitted to both the Lufthansa board and the Belgian government for final approval. The European Commission has also yet to give its approval.

Fewer redundancies than feared

Only last week, Brussels had postponed the expansion of its flight schedule because the airline’s financial situation had worsened. The management had previously announced a drastic savings plan in May. It planned to reduce the fleet from 54 to 38 aircraft and to cut about 1000 jobs. According to VRT, the number of redundancies has now been reduced to about 350.

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