The board of the airline Lufthansa has decided to postpone the decision to receive German state aid, which was negotiated earlier this week, after the European Commission's demands were met, according to a press release.

Lufthansa's board has not been able to approve the support package based on EU guidelines.

”"The board has noted the conditions indicated by the European Commission. These would lead to a weakening of the hub function at Lufthansa's home airports in Frankfurt and Munich. The resulting financial impact on the company and the planned repayments of the stabilization grant, as well as alternative future scenarios, must be thoroughly evaluated," the board states in the press release.

Chancellor Angela Merkel reportedly told government negotiators during the negotiations for the aid package that the EU would not be allowed to put any obstacles in the way of Lufthansa by, for example, depriving the company of important gate slots at its home ports of Frankfurt and Munich, according to Handelsblatt's reporting from earlier this week.

However, she clarified that she was aware that it would be "a tough fight" with the EU, according to the business newspaper.

The reason for the EU Commission's reluctance to immediately approve Lufthansa's agreement with the German state on a tax-financed rescue package is that it risks distorting competition unless Lufthansa, in return for the support, frees up business opportunities to other airlines that do not receive the same support.

The agreement between Lufthansa and the German state is worth 9 billion euros and is intended to save the company from the pandemic crisis.

Lufthansa's shares traded down on the news.

Source: Nyhetsbyrån Direkt