An EU court has annulled a decision by the European Commission to approve a €6 billion bail-out of German airline Lufthansa during the COVID-19 pandemic.

In a case brought by Ryanair and German airline Condor, the General Court of the Court of Justice of the European Union (CJEU) said that the commission had made “several errors” in its decision.

The judgment said that the errors included:

• Considering that Lufthansa was unable to obtain financing on the markets for the entirety of its needs,
• Failing to require a mechanism incentivising Lufthansa to buy back Germany’s shareholding as quickly as possible,
• Denying that Lufthansa held significant market power at certain airports, and
• Accepting various commitments that “do not ensure that effective competition on the market is preserved”.

Conditions infringed

Germany made the decision to support Lufthansa in June 2020, and the commission decided that the measures were compatible with a temporary framework for state-aid measures introduced during the pandemic.

The judgement today (10 May) found, however, that the commission had infringed “several” conditions laid down by the framework.

The court said that there was nothing in the decision to indicate that the commission had assessed the possible availability of collateral, their value, and the terms for any loans that it might have been possible to obtain on the financial markets against such collateral.

It added that the commission had failed to take into consideration all the factors that were relevant for assessing Lufthansa’s market power at airports.