MIAMI – Following the €450m rescue package for Austrian Airlines (OS), the European Union (EU) Commission has announced today that it approved the airline’s request for €150m in state grants.
The shareholders of the carrier’s owner group, Lufthansa (LH), approved last month the stabilization package while Austria waited for the Commission’s approval on its subordinated loan.
Aid package conditions
According to the statement by the EU Commission, the Austrian government requested to compensate the company for the damage suffered from March 9 to June 14, 2020, due to the government-imposed travel restrictions.
As a response, the Commission considered that the coronavirus outbreak qualified as such an exceptional occurrence, as it was an extraordinary, unforeseeable event having a significant economic impact.
The exceptional intervention will include €150m in subordinated grants, which is “lower than the estimated damage directly caused to the airline” in the mentioned period, said the EU body.
The support will be converted into a loan only after the carrier’s financial statements for 2020, audited by an independent external firm, confirm that the aid does not exceed the amount of damage suffered during the specified time.
Consequently, the Commission stated that any public support received by the carrier that overseeds the audited damage will have to be returned to the Austrian government.
Lufthansa and third party contributions
Under the approved framework, LH agreed to inject €150m in equity to its subsidiary OS. The later could be drained from the granted €6bn from the German recapitalization of the group.
Alongside this contribution, Austrian commercial banks will give €300m in the form of a loan, subject to a government aid scheme.
Blue skies for Austrian
Beyond the financial picture to maintain itself afloat, the company already resumed short-haul and medium-haul operations in June.
For July, OS is set to operate long-haul flights to start its recovery following LH Group’s announcement last week.
Now, with today’s green light, the airline can “optimistically look ahead to the future, and also to once again take off with full thrust to boost the Austrian economy,” said OS CEO Alexis von Hoensbroech.