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Germania takes legal action over state loan to Air Berlin

Privately owned German airline Germania has lodged a complaint with a court in Berlin over a state loan promised to insolvent carrier Air Berlin.31 Aug 2017

Germania instituted an "urgent procedure" to stop the Federal Republic of Germany from granting the €150 million loan to Air Berlin before the European Commission has approved the aid, the court said.

Air Berlin filed for insolvency last week after its main shareholder, Abu Dhabi's Etihad Airways, withdrew its financial support.

"The federal German government, Lufthansa and other partners are supporting Air Berlin in its restructuring efforts. The federal government is supporting Air Berlin with a bridging loan to maintain flight operations for the long-term," Air Berlin said.

Germania contends that the federal government intends to favour Lufthansa by creating a  'German champion' to take over the assets of Air Berlin "to the detriment of the competitors, the free competition and the customers", the court said. This would indirectly influence a private-sector takeover procedure in favour of a single provider and further strengthen that provider's dominant market position, it said.

Ryanair has also argued that the government loan and negotiations with Lufthansa are an attempt to "carve up Air Berlin’s assets, while excluding major competitors and ignoring both EU competition and state aid rules" and called for the Commission to take "immediate and decisive" actions.

The court will hear the case on 15 September.