Lufthansa bailout deal by Brussels and Berlin

Lufthansa bailout deal by Brussels and Berlin

Lufthansa has agreed to give up take-off and landing slots at its Munich and Frankfurt hub airports in exchange for EU approval for a €9 billion bailout from the German government.

The deal heads off a dispute between Brussels and Berlin over plans to save the country’s prized airline from the impacts of the economic crisis.

A European Commission official said Saturday morning that “commitments proposed by Germany to preserve effective competition” had paved the way for a deal on the mega bailout — the largest airline rescue announced so far.

Earlier this week, Lufthansa said it could not immediately approve the proposed government bailout due to the terms being imposed during preliminary talks with the Commission. German Chancellor Angela Merkel is said to have pledged a “tough fight” should EU officials try to water down Lufthansa’s position in the European aviation market in exchange for allowing the government aid.

In a statement published Saturday morning, Lufthansa said that “the scope of the conditions required in the EU Commission’s view has been reduced in comparison with initial indications.”

Under the terms of the deal, the airline said it will transfer a limited number of slots to European competitors, with those slots initially only available to new entrants at the Frankfurt and Munich airports.

A Commission spokesperson told media the deal includes “commitments from Lufthansa to make available certain slots and assets at Frankfurt and Munich airports once the airports become congested again, and enable a viable entry or expansion of activities by other airlines at these airports to the benefit of consumers and effective competition.”

The EU executive said it will now “assess Germany’s notification as a matter of priority.” Under the terms of the bailout, the German government will take a 20 percent stake in Lufthansa and the option to increase that by an additional 5 percent. Berlin has pledged to sell its stake as soon as the company is back on its feet.

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