DLAKY Deutsche Lufthansa AG (QX)

By Adriano Marchese

Budget airline Ryanair Holdings PLC called on German Chancellor Angela Merkel to abandon a state aid program to Deutsche Lufthansa AG, which claims the 9 billion euro ($9.86 billion) is its only viable alternative for maintaining solvency.

In a statement, Ryanair said the German chancellor to scrap the "illegal state aid scheme" and instead should replace the plan with a one that would reduce air travel taxes for all airlines operating in Germany for the next 24 months.

Under a reduced-tax plan, Lufthansa would be the major beneficiary, Ryanair claimed, adding that it would also encourage other airlines to return to flying and savings could be passed on to consumers.

"This would provide Lufthansa, and all other airlines in Germany, with transparent supports, which would comply with competition rules and would encourage all airlines in Germany to return to flying and restore the German tourism industry as quickly as possible," Ryanair said.

Lufthansa's supervisory board earlier said it had not yet approved a bailout package worth EUR9 billion because it needed to examine the conditions required by the European Commission.

However, the conditions indicated by the commission "would lead to a weakening of the hub function at Lufthansa's home airports in Frankfurt and Munich," Lufthansa said.

Ryanair Chief Executive Michael O'Leary excoriated the German airline for holding on to its slots at the Frankfurt and Munich airports, as well as denying the German government effective board representation, which would allow government directors to participate in board decisions.

"If Lufthansa do not want to hand over slots, or give the German government the effective board representation they are entitled to in return for a state subsidy of EUR9 billion, then Mrs. Merkel should say buzz off Lufthansa," he said.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

May 27, 2020 14:14 ET (18:14 GMT)

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