EU's Vestager denies making Lufthansa bailout more difficult

By Foo Yun Chee

BRUSSELS (Reuters) - EU antitrust chief Margrethe Vestager denied on Friday that she was putting hurdles in the way of Lufthansa's $10 billion government rescue, saying companies getting big capital injections from the state have to offset their competitive advantage.

Vestager wants Lufthansa to permanently give up some take-off and landing slots at Frankfurt and Munich airports, where it commands a two-thirds market share, in return for giving the green light to the German government taking a 20% stake in the airline.

Lufthansa's board, however, has rejected her demands. Berlin plans to inject 6 billion euros ($6.7 billion) of new capital, most of it non-voting, into the airline, combined with 3 billion euros in state-backed loans.

Vestager said she was not making it more difficult for Lufthansa.

"No, we are not creating extra hurdles, what we are doing is to make sure when a company, and that can be any company with market power, with a recapitalisation bigger than 250 million euros, that disturbance of competition is being remedied," she told a news conference.

Vestager said extra demands would be imposed on companies getting a hefty capital injection from the state compared to those getting state loans.

"It is likely that you will be more easily able to raise money in the market. You also get a very strong shareholder on board and it is highly likely that other investors, but also competitors, will look at this as a strengthening of your company," she said.

"When we discuss how to remedy disturbance of competition both in (airline) merger cases and in antitrust cases, then the slots very often become the centre of debate," Vestager said.

She said it was a high priority to get a Lufthansa deal done but could not say when this would be done.

Representatives of Lufthansa's cabin crew, in a letter to Vestager and European Commission President Ursula von der Leyen, harshly criticised the conditions set by Brussels and asked for a reconsideration, German mass tabloid Bild reported on Friday.

Otherwise, 135,000 jobs would be directly put at risk, the union said.

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(Reporting by Foo Yun Chee; additional reporting by Christoph Steitz; Editing by David Goodman and Susan Fenton)