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UPDATE 3-Lufthansa accepts tweaked demands by Brussels over state bailout

Fri, 29th May 2020 22:29

* To transfer up to 24 slots at Frankfurt and Munich

* This translates into six slots per aircraft and day

* Supervisory board must approve agreement
(Adds European Commission statement)

By Holger Hansen, Christoph Steitz and Ilona Wissenbach

BERLIN/FRANKFURT, May 30 (Reuters) - Lufthansa's
management board has accepted a more favourable set of demands
from the European Commission in exchange for approval of a 9
billion euro ($10 billion) government bailout, the carrier said
on Saturday, paving the way for its rescue.

The agreement comes after the airline's supervisory board on
Wednesday rejected an initial deal with Brussels including
conditions that were significantly more painful.

Lufthansa and the rest of the airline sector have been hard
hit by what is expected to be a protracted travel slump due to
the coronavirus pandemic.

Under the latest agreement, Lufthansa said it will be
obliged to transfer up to 24 takeoff and landing slots for up to
four aircraft to one rival each at the Frankfurt and Munich
airports.

This translates into three take-off and three landing rights
per aircraft and day, it said, confirming what sources had
earlier told Reuters.

"For one-and-a-half years, this option is only available to
new competitors at the Frankfurt and Munich airports," Lufthansa
said, initially excluding budget carrier Ryanair. "If no
new competitor makes use of this option, it will be extended to
existing competitors at the respective airports."

The previous deal had included forfeiting 72 slots used by
12 of 300 jets based at the Frankfurt and Munich airports, a
source familiar with the matter said.

INTERMEDIATE STEP

The slots, to be allocated in a bidding process, can be
taken over only by a European peer that has not received any
substantial state aid during the pandemic, Lufthansa said.

The Commision said once it has been officially notified by
Germany on the aid package it will assess the issue as a matter
of priority.

"(Lufthansa's remedies will) enable a viable entry or
expansion of activities by other airlines at these airports to
the benefit of consumers and effective competition," it said in
a statement.

The airline's supervisory board needs to approve the deal,
Lufthansa said, adding it would convene an extraordinary general
meeting to obtain shareholder approval for the bailout.

The largest German corporate rescue since the coronavirus
crisis struck will see the government get a 20% stake in
Lufthansa, which could rise to 25% plus one share in the event
of a takeover attempt. A deal would also give the government two
seats on Lufthansa's supervisory board.

Rivals such as Franco-Dutch group Air France-KLM
and U.S. carriers American Airlines, United Airlines
and Delta Air Lines are all seeking state aid
due to the economic effects of the pandemic.

Germany, which has set up a 100 billion euro fund to take
stakes in companies hit by the pandemic, said it plans to sell
the Lufthansa stake by the end of 2023.

"The German government, Lufthansa and the European
Commission have reached an important intermediate step in the
aid negotiations," the Economy Ministry said in a statement.

It said talks with the Commission over state aid would
continue.

($1 = 0.9011 euros)

(Additional reporting by Christian Kraemer and Yun Chee Foo;
Editing by Sabine Wollrab, Sandra Maler, Jonathan Oatis and Will
Dunham)

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