Lufthansa is facing a takeover ban

Green light from Brussels: The European Commission has approved Germany’s planned contribution to increase Lufthansa’s equity capital by six billion euros. Together with state-guaranteed loans of three billion euros, this will result in a rescue package totalling nine million euros.

However, Lufthansa must also meet certain conditions. It was already known that the airline has to surrender 24 slots a day to its competitors in Frankfurt and Munich, and this has now been confirmed by the Commission. It is also confirmed that the group may neither pay dividends nor buy back shares until 75 percent of the aid has been repaid. Bonus payments to the management are also prohibited until then.

No takeover of Condor or Alitalia

However, it also imposes a takeover ban. According to this, Lufthansa «may not acquire more than 10 per cent of the shares of competitors or other companies active in the same business segment until at least 75 per cent of the recapitalisation instrument has been redeemed».

Speculation about a possible takeover of Condor or Alitalia by Lufthansa had already become unlikely due to the Corona crisis. Now they are completely off the table for the time being. Furthermore, the EU states that Lufthansa «may not use the aid to support the economic activities of integrated companies that were already in economic difficulties before 31 December 2019».

No help for subsidiaries in crisis

The Commission does not address the precise definition of this point. For its subsidiary Eurowings, for example, Lufthansa had already announced «turnaround measures» for its subsidiary Eurowings in the summer of 2019, so that the low-cost carrier could «reach the profit zone as quickly as possible».