Difficult negotiations between Belgian Government and Lufthansa on Brussels Airlines blocked by sanctions issue

The negotiations between Lufthansa Group and the Belgian federal government on state aid for Brussels Airlines continue to be difficult, financial newspapers De Tijd and L’Echo report.

According to the Belgian newspapers, the biggest issue is the sanction mechanism that comes into effect if Lufthansa does not comply with agreed decisions. In that case, there are two options: either Lufthansa pays a fine, or the government’s loan is converted into shares.

The latter point is very sensitive because Lufthansa wants to avoid any government interference in the management of the airline, while Belgian Finance Minister De Croo demands a watertight guarantee for the future of Brussels Airlines in exchange for financial support.

According to the newspapers, the Belgian government has bad memories of the period when Lufthansa took over Brussels Airlines completely. The German group made several promises at the end of 2016, but did not fulfil them.

The discussions are still ongoing, although Belgium is the only home market in which the Lufthansa Group has not yet reached an agreement with the governments on state aid. Agreements were reached in Switzerland (1.2 billion euros for SWISS and Edelweiss), Germany (9 billion euros for Lufthansa / Eurowings, an agreement that must still be validated by the shareholders on 25 June) and Austria (450 million euros for Austrian Airlines, plus 150 million from Lufthansa).

According to Austrian media, Lufthansa Group guarantees that Vienna will remain a hub for another ten years, under penalty of a fine of up to 150 million euros. The Belgian Minister of Mobility François Bellot estimated a few days ago that the Austrian deal could inspire the Belgian government.

Brussels Airlines will restart flights on 15 June.