European Commission approves German rescue aid for Air Berlin as rivals prepare for its collapse

The Commission considers rescue and restructuring aid to be among the most distortive types of State aid, which it only grants to companies once all other market options have been exhausted.  According to the Commission's 2014 guidelines on 'State aid for rescuing and restructuring non-financial undertakings in difficulty', such measures are only approved by the Commission if they are sufficiently limited in time and scope.  Strict conditions have therefore been applied to the €150 million bridging loan. 

• Firstly, Air Berlin must demonstrate its liquidity needs on a weekly basis to be eligible for new instalments. 
• Secondly, the loan must be repaid within six months (the maximum duration permitted under Commission guidelines), failing which, the German Government must submit to the Commission a winding down plan for Air Berlin. 

Lufthansa, EasyJet, Condor (part of the Thomas Cook Group) and TUI Travel have all been rumoured in the press as potential buyers for assets belonging to Air Berlin, whilst German entrepreneur and serial aviation investor Hans Rudolf Woehrl announced, through Facebook, a bid for whole of Air Berlin, through conglomerate INTRO-Verwaltungs.

Whilst rivals and investors position themselves to lay claim over the remnants of Air Berlin, other firms have criticised the Commission's decision to approve the German Government's rescue aid.

Complaints have been lodged with the German Bundeskartellamt and the Commission by Ryanair, regarding what it has alleged is an "obvious conspiracy" between the German Government, Air Berlin and Lufthansa.  Germania, a privately owned German airline, originally also filed a complaint against the German Government in a Berlin regional court.  The claim alleged that the German Government intends to favour Lufthansa in the sale of Air Berlin's assets to create a "German champion", to the detriment of competitors, free competition and consumers.  However, given that the bridging loan has been reviewed and permitted by the Commission, albeit only under the strict requirements above, Germania has dropped its complaint.

With thanks to Emile Abdul-Wahab of Ashurst for his contribution.