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EU Court annuls German government’s bailout of Lufthansa

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The EU’s General Court on Wednesday annulled the European Commission’s decision to approve a multibillion-dollar plan by the German government to save the airline Lufthansa during the covid-19 pandemic.

The plan consisted of a €6 billion recapitalization of the airline.

“The Commission made several errors,” the court said in a statement, including finding that Lufthansa “was unable to finance itself in the markets” to meet its capital needs, the trial court, which rules on competition and state aid issues, said in a statement.

The impact of this decision, which can be appealed by the Commission before the EU Court of Justice in Luxembourg, is uncertain for the time being. The aid mechanism for the airline, whereby the German state took a stake in the company, has already been implemented.

→ Lufthansa to launch new long-haul routes in winter

Last September, the German state sold the last remaining shares it still held in Lufthansa, where it took a 20% stake in 2020. The airline is now back in private hands.

Lufthansa “will analyze the verdict and then decide what to do,” the group said in a statement sent to AFP.

The case was triggered by an action brought before the EU’s General Court by low-cost airlines Ryanair and Condor, which sought the annulment of the aid scheme.

The restrictions applied during the covid-19 pandemic brought Lufthansa’s business to a virtual standstill, leaving it on the brink of bankruptcy.

The European judges also found in their decision announced Wednesday that the Commission failed to require “a mechanism to encourage Lufthansa to buy out the German state’s shareholding as soon as possible.

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