The European Court of Justice ruled on April 23 that Germany’s €6 billion recapitalization aid to Lufthansa during the COVID-19 pandemic constitutes illegal state aid, confirming the annulment of the European Commission’s approval.
This definitive judgment dismisses Lufthansa’s final appeal against a prior Tribunal General decision, prompted by complaints from rivals Ryanair and Condor over competition distortions.
The package, notified by the German government under Angela Merkel in June 2020, included a €1 billion silent participation II instrument—a convertible bond whose pricing formula failed to ensure adequate state remuneration, breaching the EU’s Temporary Framework for State Aid.
While correcting the lower court’s overly strict review of Commission discretion and affirming Lufthansa’s limited market financing access at the time, the court held the pricing flaw sufficient to invalidate the entire aid authorization.
Ryanair hailed the ruling as confirmation of evident illegality that warped aviation competition, demanding immediate recovery of €200 million in undrawn funds plus interest that Lufthansa has yet to repay despite earlier orders.
The decision pressures Germany and the Commission to enforce repayment, potentially reshaping state intervention precedents in the airline sector and leveling the playing field for low-cost carriers.