Coronavirus-stricken airline group Lufthansa said Wednesday its supervisory board was "unable to approve" a nine-billion-euro ($9.9 billion) German state rescue over fears of over-harsh conditions from Brussels.
"Conditions currently indicated by the EU Commission... would lead to a weakening of the hub function at Lufthansa's home airports in Frankfurt and Munich" and must be "analyzed intensively," the company said in a statement.
"Against this background, the Supervisory Board was unable to approve the stabilization package in connection with the EU conditions."
The Lufthansa group, which also includes Brussels and Austrian Airlines and Swiss, has been bleeding one million euros per hour with around 90 percent of its fleet grounded.
Under plans announced Monday after fierce political wrangling, Berlin said it would take a 20-percent stake in the group, with an option to claim a further five percent plus one share to block hostile takeovers.
On top of a total 5.7 billion euros in extra capital, public investment bank KfW would also lend Lufthansa three billion euros.
The company would agree to pay back much of the capital plus interest, while granting the state two seats on its supervisory board.
But German media reported that Brussels competition watchdogs might demand concessions in return such as valuable takeoff and landing slots at Lufthansa's Frankfurt and Munich Hubs.
Such an intervention would be "incomprehensible bossing-around" of the company, said Markus Soeder, head of Chancellor Angela Merkel's Bavarian conservative allies.
Gaps opened by a Lufthansa retreat "could only be filled by dumping providers like Ryanair, who do not operate in a socially fair or sustainable way," cabin crew union Ufo said.
Ryanair boss Michael O'Leary said Tuesday that his huge no-frills Irish carrier would appeal against the planned part-nationalisation of Lufthansa, calling the deal "illegal state aid" that distorts competition.