Germany’s Lufthansa ‘unable to approve’ state rescue over strict EU conditions

Coronavirus-stricken airline group Lufthansa wavered Wednesday on grabbing a €9 billion German state lifeline, throwing up new turbulence for a rescue that could decide the fate of the historic company.

Germany's Lufthansa 'unable to approve' state rescue over strict EU conditions
Wing of a Lufthansa plane. Photo: DPA

In a statement, Lufthansa said its supervisory board was currently “unable to approve” the deal over fears of over-harsh conditions from EU competition watchdogs.

German media had previously reported the European Commission would demand the group give up valuable takeoff and landing rights at its Frankfurt and Munich hubs in exchange for Brussels' green light.

“Conditions currently indicated by the EU Commission… would lead to a weakening of the hub function at Lufthansa's home airports” and must be “analysed intensively,” the company said.

But it added that the supervisory board “continues to regard economic stabilisation fund (WSF) stabilisation measures as the only viable alternative for maintaining solvency”.

Since the pandemic hit Europe, the Lufthansa group — which also includes Brussels and Austrian Airlines and Swiss — has been bleeding one million euros per hour, with around 90 percent of its 760-aircraft fleet grounded.

Asked about the latest stumbling block, Chancellor Angela Merkel said that “negotiations are proceeding along standard lines, as they have been for the past few days”.

Berlin to climb aboard

Under plans announced Monday after fierce political wrangling, Berlin said it would take a 20-percent stake in the group, with an option to claim a further five percent plus one share to block hostile takeovers.

That would make the federal government Lufthansa's biggest shareholder.

On top of a total €5.7 billion in extra capital and €300 million to buy the shares at face value, public investment bank KfW would also lend Lufthansa €3 billion.

READ ALSO: Germany's Lufthansa to ramp up European flights in June

The company would agree to pay back much of the capital plus interest, while granting the state two seats on its supervisory board.

Hammering out the details of the package took so long because Merkel's conservatives were keen to minimise state control over the company's day-to-day running.

But their centre-left SPD junior partners wanted influence over issues like potential job cuts and environmental targets.

With the airline industry set for a long, slow return to cruising altitude after the coronavirus plunge, Lufthansa chief Carsten Spohr has said the group likely has 100 too many planes and, in turn, 10,000 superfluous positions out of almost 140,000 jobs worldwide.

Lufthansa is not the only airline turning to state aid to survive.

The EU Commission has already approved a €7 billion bailout for Air France-KLM via loans rather than a capital boost, with the Dutch state expected to add between two and four billion euros more.

Dogfight with Ryanair

German unions had welcomed Monday's offer from Berlin and attempted to warn Brussels off harsh conditions.

Gaps opened by a Lufthansa retreat from Frankfurt and Munich “could only be filled by dumping providers like Ryanair, who do not operate in a socially fair or sustainable way,” cabin crew union Ufo said.

Forcing the carrier to give up slots would represent “incomprehensible bossing-around” of the company, said Markus Söder, head of Merkel's Bavarian conservative CSU allies.

Even before Lufthansa's hesitation to brave potential demands from Brussels, others were heralding a challenge to what they saw as overly generous support from Berlin.

Ryanair boss Michael O'Leary said Tuesday that his huge no-frills Irish carrier would appeal against the planned part-nationalisation of Lufthansa, calling the deal “illegal state aid” that distorts competition.

As Germany has deployed vast fiscal resources to support workers and companies through the pandemic, some voices from around Europe have warned it could enjoy an unbeatable head start once the immediate crisis has passed.

READ ALSO: Ryanair plans to appeal Germany's Lufthansa rescue deal

By Tom Barfield

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German health agency expects number of Covid ICU patients to rise

The Covid pandemic is continuing to cause problems around Germany, with concerns that the number of patients needing treatment will rise in the coming weeks.

German health agency expects number of Covid ICU patients to rise

In its weekly Covid report, the Robert Koch Institute (RKI) said that confirmed infections appeared to be rising in some German states, and falling in others.

But experts warned that the situation remained tense, with many infections not reported. 

Therefore, in the coming weeks, “hospitalisations, an increase in intensive care treatment and deaths are to be expected, especially among the elderly”, said the RKI.

People over the age of 80 “continue to be most affected by severe courses of the disease”, the experts said in their report. 

The incidence of infections is continuing to rise for this age group, and the number of outbreaks of Covid-19 in medical treatment facilities as well as in old people’s and nursing homes is going up.

READ ALSO: Which Covid rules are likely to return to Germany in autumn?

The number of patients with Covid-19 being treated in intensive care units (ICUs) is also rising slightly. In the previous week, the number was reported to be around 1,330. And on Thursday July 28th, 1,550 people were in ICUs in Germany with 484 receiving ventilation treatment, according to the DIVI intensive care register. 

The number of deaths in connection with the virus is currently around just over 400 per week. The RKI says this trend is a plateau.

When it comes to the overall picture of Covid in Germany, the RKI said there was a “sideways movement rather than a decreasing trend”.

Last week, the nationwide 7-day incidence decreased slightly compared to the previous week. The overall picture shows falling incidences in most western German states and Berlin, with incidences still rising slightly in the other eastern German states and Bavaria.

The RKI estimates there’s been a total of 800,000 to 1.5 million people with Covid (who also have symptoms) in the past week alone in Germany.

Last week experts warned that they expected the Covid situation to get worse in the coming weeks as many schools in Germany return after the summer break.

READ ALSO: Germany’s summer Covid wave set to get worse

The Omicron sub-variant BA.5, which has dominated in Germany since mid-June, has almost completely displaced other variants. It accounts for 89 percent of samples in the past week, the RKI said.

Health Minister Karl Lauterbach warned people against underestimating getting Covid again.

The SPD politician pointed out that it was very easy to become infected with BA.5 – even for those who were infected with a previous type.

He warned that many could become seriously ill or die, plus there’s the risk of picking up Long Covid.

“Therefore, we have to solve the problem not by constant infection, but by better vaccines,” Lauterbach said.

‘Call things as they are’

Lauterbach, meanwhile, defended himself against his choice of words when describing the possibility of a new dangerous Covid variant emerging in autumn. 

In an interview with Bild newspaper in April he said: “It is quite possible that we will get a highly contagious Omicron variant that is as deadly as Delta – that would be an absolute killer variant.”

He was slammed for his dramatic choice of words. 

This week Lauterbach said: “I use few vocabulary that is apocalyptic. But sometimes you have to call things as they are.”

If there were a virus that linked the contagion of the BA.5 variant with the severe course of a Delta variant, “that would be a killer variant”, he maintained.

But he stressed that he had “not said that such a variant is definitely coming, but that we have to be prepared for such a variant”.

READ ALSO: German Health Minister calls on under 60s to get next Covid jab