CJEU Upholds Annulment of Lufthansa's €6 Billion COVID Bailout — A Fresh Headache for One of TAP's Two Remaining Bidders

The Court of Justice of the European Union (CJEU) ruled on Thursday that Deutsche Lufthansa loses its final appeal in a five-year fight over the legality of the €6 billion recapitalisation Berlin pumped into the airline at the height of the COVID-19 pandemic. The judgment, in case C-457/23 P Deutsche Lufthansa v Ryanair and Condor Flugdienst, upholds the May 2023 General Court decision that annulled the European Commission's 2020 approval of the German bailout — and confirms that the Commission committed errors in failing to assess whether Lufthansa could have raised the same money on private markets and in misjudging its market power at Frankfurt and Munich hubs.

The ruling is, on its face, a German story. But it lands at a delicate moment for Lisbon.

The TAP timing problem

On 2 April 2026, Lufthansa and Air France-KLM submitted non-binding offers for the 49.9% stake the Portuguese state plans to sell in TAP Air Portugal, after IAG (parent of Iberia and British Airways) withdrew from the process. Parpública, the state holding company managing the privatisation, has 30 days to deliver a report to the government assessing the merits of each bid; that window closes around 2 May. Bidders selected for the next phase will then have 90 days to submit binding offers, with completion targeted for the second half of 2026.

The CJEU judgment does not directly affect Lufthansa's eligibility to bid for TAP. But it adds a layer of reputational and procedural noise the Berlin-Frankfurt group could have done without. Ryanair, which brought the original action, has already used the General Court's 2023 ruling as ammunition in lobbying campaigns against further consolidation involving Lufthansa — and its CEO Michael O'Leary has consistently argued that Lufthansa's existing dominance at central European hubs makes additional acquisitions anti-competitive by design.

What the Commission has to do now

Procedurally, the Commission must reassess the German aid measure under proper state aid rules. Berlin had already exited its position in Lufthansa by 2022, recouping the capital with a profit, so there is no realistic prospect of clawback. But the precedent matters: the General Court found the Commission misapplied the Temporary Framework introduced for COVID emergencies, particularly the requirement to verify the absence of private financing alternatives. That same Temporary Framework underpinned the European Commission's parallel approval of Lisbon's €3.2 billion restructuring aid for TAP — a separate file that Ryanair has also challenged in the EU courts and that remains unresolved.

The wider state aid landscape

Thursday's judgment slots into a longer line of decisions. The General Court has, since 2023, struck down Commission approvals for COVID-era bailouts to SAS Scandinavian Airlines, Air France, KLM, and several Italian carriers — billions of euros in aid that, in the Court's reading, never satisfied the conditions the Commission claimed to apply. With Thursday's appeal closed, attention now turns to whether any of those rulings will produce actual repayment orders or simply formal re-approvals after the fact.

For Lisbon, the relevant question is narrower. Did Brussels apply the same flawed reasoning to TAP's bailout that it applied to Lufthansa's? Ryanair believes it did. A General Court hearing on the TAP file is pending. A finding similar to today's — even one without a clawback — would complicate any future Lufthansa-TAP integration that relies on regulatory goodwill from DG Competition.

What to watch

Three signals will matter in the next four weeks. First, whether Parpública's report singles out either bid for state aid risk; the government has signalled it will publish the broad terms but not the detailed financials. Second, whether Miguel Pinto Luz, the Infrastructure Minister steering the file, makes a public statement on the CJEU ruling — silence will itself be read as a signal. Third, whether Air France-KLM moves to capitalise; CEO Ben Smith has been careful in public not to attack Lufthansa directly, but his Paris-based group is now the only one of the three original bidders without a recent CJEU loss attached to its name.