Prime minister imposes conditions on state aid for Brussels Airlines

Prime minister imposes conditions on state aid for Brussels Airlines
© Brussels Airlines

Belgian Prime Minister Sophie Wilmès has replied to a request by Brussels Airlines for state aid to help it weather the troubles caused by the new coronavirus (Covid-19).

Wilmès has replied to a letter sent during the week by Carsten Spohr, CEO of Lufthansa, the parent company of Brussels Airlines.

In the letter, Spohr promised Lufthansa had no intention of abandoning Brussels Airlines whatever the Belgian government’s decision. He also gave a pledge that any aid granted by Belgium would be devoted specifically to the Belgian airline, and would not go into the general finances of Lufthansa.

In her reply, Wilmès demanded solid and specific commitments from Lufthansa on the future of Brussels Airlines inside the group before any decision can be taken on whether to grant the aid requested.

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The question is a sensitive one in Belgium, where memories of Sabena remain unhealed.

In 2001, the national carrier Sabena went bankrupt, despite promises made by parent company Swissair to inject emergency funding of €258 million into the airline. Swissair itself soon followed its subsidiary into bankruptcy.

Brussels Airlines is now asking for a rescue package of €290 million to ease liquidity problems. And in an effort to avoid a repeat of the Sabena catastrophe, Wilmès has demanded a detailed plan from Lufthansa of growth for Brussels Airlines, with quantified targets for the long-term development of Brussels Airport as a hub.

This implies investment by Lufthansa in both the airline and the airport, and there is now speculation that the government could take a shareholding in Lufthansa to allow it to veto any plans for Brussels Airlines if finds unacceptable.

However that will be a question for the next government, duly constituted. The coalition currently headed by Wilmès does not, as a caretaker administration, have the authority to make such decisions. The special powers granted to the government by parliament are restricted to handling the coronavirus crisis, and do not include the acquisition of holdings in foreign companies.

Alan Hope

The Brussels Times

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