Ryanair Group CEO Michael O’Leary is one of the most controversial and outspoken people in the airline industry.
Several weeks ago O’Leary blasted the prospect of Lufthansa getting significant government aid, comparing the airline to a crack cocaine junkie:
“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.”
Well, this week it was revealed that the German government would be providing Lufthansa Group with €9 billion in aid, including the country taking a 20% stake in the airline group. This is in addition to the payroll support that the airline has already received.
Well, Ryanair has a big problem with this, and plans to appeal this “illegal” state aid. It’s noted that this further strengthens Lufthansa’s monopoly-like grip on the German air travel market, distorting competition.
Here’s what O’Leary had to say about this, which is quite something:
“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 €9bn from the German Govt, €1bn from the Swiss Govt, €800m from the Austrian Govt, and €500m from the Belgian Govt 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 €9bn worth of German Govt 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 Govt, 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 2 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 €9bn, at a time when its competitors Ryanair, EasyJet, BA, among others, do not need such State subsidies to survive.
The German Govt continues to ignore EU rules when it suits them to subsidise large German companies, but then lectures every other EU Govt 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 5 years.”
Ouch! I’m not sure Ryanair’s appeal will get the airline very far, though it’ll be something to watch.
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