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Lufthansa may be forced to give up coveted slots at Frankfurt and Munich airports as the EC pushes to attach conditions to Germany’s €9bn bailout of the airline and rival Ryanair threatens to challenge the deal. Angela Merkel’s administration agreed Monday to support the country’s national carrier, which has been appealing for state aid in four countries as the coronavirus crisis cut its operations to just 1 per cent of its regular capacity. As part of the rescue package, Berlin will take a 20% stake in the airline, with the option of increasing that to a blocking minority of 25%, plus one share, in the event of a hostile takeover bid. However, EU officials are concerned that the deal may undermine competition and are in discussions to force the airline to get rid of some slots to make sure rivals have a fair advantage, people with direct knowledge of the discussions said. Merkel’s party, the CDU, hit back at talks in Brussels over reducing slots, warning that Lufthansa’s bailout, which it referred to as a “temporary strengthening of a European flagship carrier” must not be jeopardised by “overregulation in Brussels”.<br/>

Ryanair said Tuesday it will appeal against Germany's temporary partial nationalisation of rival carrier Lufthansa, arguing the rescue deal constitutes "illegal state aid" that distorts competition. Berlin had launched Monday a $9.8b rescue of Lufthansa under a deal that sees it take a 20% stake of the coronavirus-ravaged group. "The German government continues to ignore EU rules when it suits them to subsidise large German companies, but then lectures every other EU government about respecting the rules when they ignore them," said Ryanair CE Michael O'Leary. "Ryanair will appeal against this latest example of illegal state aid to Lufthansa, which will massively distort competition and level playing field into provision of flights to and from Germany for the next five years." The Dublin-based carrier had meanwhile taken a GBP600m loan earlier this month from the UK government's COVID Corporate Financing Facility. Ryanair however argues that the facility, which is designed to help coronavirus-hit companies and is adminstered by the Bank of England, does not compare to Lufthansa's rescue package. "Lufthansa is addicted to state aid. Whenever there is a crisis, Lufthansa's first reflex is to put its hand in the German government's pocket," said O'Leary.<br/>

Austria's government and Austrian Airlines on Tuesday reached agreement on loans for the airline and to keep Vienna airport as a long-haul hub, a major step forward in the rescue negotiations, daily Kurier said. Austria's government agency in charge of administering the COVID-19 rescue fund, COFAG, and a banking consortium led by Erste Group agreed on loans of E300m over a period of six years, the newspaper said. These loans, 90% guaranteed by the state, would be secured with Austrian Airlines' aircraft and an equity interest in the Austrian carrier. No agreement had been reached yet on additional equity, for which the state demanded a participation in the company, Kurier said. A COFAG spokesman said negotiations were ongoing. <br/>

Air Canada will launch an “abridged” schedule this summer with 97 destinations down from 220 last year, betting that coronavirus cases will decline and governments will ease restrictions to enable more international travel. The carrier began its summer sales push by resuming service on 25 May to New York-LaGuardia, Washington-Dulles, Los Angeles, San Francisco, Boston and Chicago. Governments in the USA and Canada have restricted “non-essential travel” between their nations through 22 June. The flag carrier on 22 May had announced it would increase its network within Canada “from 34 routes in May to 58 routes in June, with more routes added in August and September”. “Air Canada has also updated its schedule until the end of July with resumption of some services to the US, Caribbean, South American, European and Pacific markets,” the carrier said. The carrier also has “tentative plans” to resume service to more routes between the USA and Canada if the two nations do not extend their restrictions against non-essential trans-border travel past 22 June. The capacity of Canada’s largest airline during May is down 93% year-over-year amid the travel restrictions of the pandemic, Cirium schedules data shows.<br/>

South African Airways aims to resume domestic flights between Johannesburg and Cape Town from mid-June, the cash-strapped airline said on Tuesday, as coronavirus lockdown restrictions ease. SAA, which is under a form of bankruptcy protection, suspended all commercial passenger flights in late March, when the government imposed one of the strictest lockdowns on the African continent. But President Cyril Ramaphosa said in an address to the nation on Sunday that domestic air travel for business purposes would be phased in after June 1, when the country moves to level 3 of a five-level alert system. South Africa is currently on alert level 4, a tougher level of anti-coronavirus restrictions. Ramaphosa did not give an exact date when business travellers would be able to fly domestically, and SAA said it was preparing to resume flights between Johannesburg and Cape Town when permissible. It added it had decided to extend cancellations of all regional and intercontinental flights until the end of June.<br/>

Thai Airways Internationcal’s request for debt rehabilitation at the bankruptcy court has been accepted, the Court of Justice said Wednesday. The court’s announcement gives the troubled airline an automatic stay on its debts. The first day of hearings will be on August 17, the court said in a statement, adding that creditors may submit objections three days before the first hearing.<br/>

Air New Zealand will ground its Boeing 777-200 and 777-300 fleet until at least the end of this year as part of organisation-wide cost-cutting measures. Including deferrals of planned Airbus A321neo deliveries, the airline has also deferred or cancelled almost NZ$700m in expected capital expenditure to December 2022, it said Tuesday. Air New Zealand’s existing fleet includes seven in-service 777-300ERs, between six and 10 years of age, and eight 777-200ERs, 13 to 15 years old and in storage. The carrier also has seven in-service and stored A321neos, and another seven A321neos scheduled for delivery between January 2022 and April 2024. Other measures include cancelling non-essential spend, reducing leasing costs and modifying various vendor and supplier terms. The company expects to see annualised savings of NZ$350-400m from a previously announced hiring freeze and 30% cut in staff strength that will affect 4,000 employees, and has scaled down its executive team accordingly. “Like all businesses at this time, we find ourselves facing an environment where revenues will be a small fraction of what we are accustomed to,” says CFO Jeff McDowall.<br/>