The European Court of Justice upheld the annulment of the EU Commission’s approval of Lufthansa’s Corona-era state aid, confirming the earlier ruling that the Commission breached emergency rules designed to facilitate crisis support.

The aid package included roughly 300 million euros in equity, about 4.7 billion euros in non-convertible passive equity, and 1 billion euros in convertible bonds.

The judgment suggests the Commission’s approval did not meet proper procedural and evaluative standards under the pandemic Temporary Framework, undermining the legality of the package as approved.

Rivals Ryanair and Condor had challenged the Commission’s approval, which the Court rejected as compliant enough on process but not on legality overall.

The ongoing EU in-depth investigation into the matter remains active and could be influenced by the court ruling, potentially leading to a new Commission decision.

The Court agreed that the General Court was right to say the Commission violated the Temporary Framework by how the equity conversion price was set when converting the passive stake into equity.

Lufthansa pledged cooperation with ongoing proceedings and emphasized continued engagement with involved institutions.

Germany is required to recover the aid following the ruling, with a potential impact on state aid recovery.

The ECJ criticized certain aspects of the Commission’s assessment, including questions about Lufthansa’s market power and its ability to refinance via financial markets, while preserving broader discretion in economic judgments.

The six-billion-euro package approved in spring 2020 consisted of a 20 percent equity stake and silent participations, some convertible into shares, and was approved without a formal review procedure.

Ryanair welcomed the ruling, arguing the rescue amounted to illegal aid distorting competition and estimating Lufthansa benefited by hundreds of millions.

The ECJ affirmed that the General Court’s critique of the Commission was misplaced and that the Commission retains a wide margin of appreciation in difficult economic contexts.