The Belgian government and Lufthansa (LH, Frankfurt International) have reportedly agreed, after months of back-and-forth, on the terms of a EUR460 million euro (USD bailout) for Brussels Airlines (SN, Brussels National), which do not include the state taking any stake in the carrier, public broadcaster VRT has reported.
According to the terms of the agreement, the Belgian government will loan the airline EUR290 million repayable by 2026. Lufthansa, for its part, committed to recapitalise its Belgian subsidiary with EUR170 million, of which EUR70 million will be earmarked for restructuring of the airline.
In return for its contribution to the rescue, the Belgian government secured a commitment by Lufthansa to keep Brussels National as one of its hubs and develop the airport. In addition, the German parent pledged to retain the brand of Brussels Airlines and its corporate headquarters in Belgium.
The deal still requires approvals by the full Belgian cabinet and the board of Lufthansa. It has yet to be made public.
The agreement was reached just days after the Belgian Finance Minister Alexander De Croo ramped up pressure on Lufthansa by saying that the stalemate concerning state aid for the airline was entirely due to the behaviour of the German holding, which had not been constructively engaging with the Belgian government.
Speaking during a parliamentary hearing, De Croo underlined that the Belgian government held 24 video conferences, sent three formal letters signed by the Prime Minister to the German partners, and tabled six draft agreements. Meanwhile, Lufthansa, which wholly owns Brussels Airlines, had been largely passive during the negotiations.
De Croo underlined that the same could not be said of the German government, which sympathised with its Belgian partners and expressed the intention to save Brussels Airlines.
One of the key bones of contention was the form of support and the potential partial renationalisation of the airline with the Belgian government taking a stake in the airline. Brussels Airlines is currently wholly-owned by Lufthansa.
The Belgian airline was the last major unit of Lufthansa Group which agreed on terms of its state aid. Lufthansa itself has secured a EUR9 billion euro (USD10.4 billion) aid package from the German government, which is set to become a 20% shareholder. Austrian Airlines (OS, Vienna) and Swiss (LX, Zurich) have also secured EUR600 million (USD690 million) and CHF1.5 billion (USD1.6 billion) bailouts, although the details of their disbursements have yet to be fine-tuned.
