Never one to shy away from controversy, Ryanair CEO Michael O’Leary is on the warpath after Lufthansa and Germany reached an agreement on a €9 billion aid package. Calling the aid an “illegal subsidy”, Ryanair has vowed to fight it.
Ryanair Condemns Lufthansa Aid Package From Germany
Ryanair argues the aid package will “tighten Lufthansa’s monopoly grip” over Germany to the detriment of other carriers and consumers.
O’Leary minces no words:
“Lufthansa is addicted to State Aid. Whenever there is a crisis, Lufthansa’s first reflex is to put its hand in the German Government’s pocket. While most other EU airlines can survive on just payroll support schemes (for which we are extremely grateful), Lufthansa claims it needs another €9 billion from the German Government, €1 billion from the Swiss Government, €800 million from the Austrian Government, and €500 million from the Belgian Government as it stumbles around Europe sucking up as much State Aid as it can possibly gather.
“How can airlines like Ryanair, EasyJet and Laudamotion be expected to compete with Lufthansa in the short haul market to and from Germany, now that it has €9 billion worth of German Government subsidies to allow it to engage in below cost selling or buy up even more competition for the next number of years.
“It is deeply ironic that the German Government, which lectures all other EU countries about respecting EU rules, has no difficulty breaking the State Aid rules when it comes to Lufthansa. It waved through Lufthansa’s purchase of Air Berlin two years ago, which gave Lufthansa a monopoly in the German domestic market, and now when Lufthansa claims it needs even more State subsidies, the German Government writes a cheque for €9 billion, at a time when its competitors Ryanair, EasyJet, BA, among others, do not need such State subsidies to survive.
“The German Government continues to ignore EU rules when it suits them to subsidize large German companies, but then lectures every other EU Government about respecting the rules when they ignore them.
“Ryanair will appeal against this latest example of illegal State Aid to Lufthansa, which will massively distort competition and level playing field into provision of flights to and from Germany for the next five years.”
You might say his words were even tempered from what he said a few weeks ago:
“Lufthansa is like a crack cocaine junkie looking for state aid. They’re already getting huge payroll support from the Germany government. What do you need more state aid for?
“We don’t have many other costs at the moment because we’re all grounded. They see this as an opportunity to get one last huge quantity of state aid so they can go around and buy up everyone when this is all over.”
As amusing as it is, I’m not a fan of O’Leary’s style. Still, he makes several solid arguments above, particularly the favored (near sacrosanct) status Lufthansa enjoys in Germany. I’m not sure Ryanair’s protests will yield the results he wants, but I look forward to Germany’s defense.
> Read More: Germany Will Control 20% Of Lufthansa Group In Exchange For €9 Billion Bailout
The EU has been making up their rules as they go along for a long time, and applying them selectively, or even retroactively. With all the billions in fines against US companies (the only ones they ever fine), you’d think they’d have the money to actually defend themselves. Nope.
I tend to agree with him.
I’m not sure how difficult slots are to get in places like FRA, MUC, ZRH, or VIE. But seems like LH should have been made to sell some of their slots off to raise cash and assure competition going forward in exchange for this subsidy.
Did you see my latest post? You were quite prophetic today!
LOL! Well, I guess common sense rules the day after all. If Delta announces a new Cargo/Logistics division I will really be on a roll!
I don’t think he is right to compare a short-haul LCC business with a legacy carrier that flies all around the world. Further, we all know that Ryanair relies on underpaying their staff and using geo-arbitrage to provide a lower-cost service (using folks from Belarus to staff flights from Germany). I think we can agree that Lufthansa becoming more like Ryanair would be a net negative for Germany, the EU, and the flying public.