24.5.2016   

EN

Official Journal of the European Union

L 134/1


COMMISSION DECISION (EU) 2016/788

of 1 October 2014

on the State aid SA.32833 (11/C) (ex 11/NN) implemented by Germany concerning the financing arrangements for Frankfurt Hahn airport put into place in 2009 to 2011

(notified under document C(2014) 6850)

(Only the English text is authentic)

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 108(2) (1) thereof,

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments pursuant to the provisions cited above (2) and having regard to their comments,

Whereas:

1.   PROCEDURE

(1)

By letter dated 17 June 2008, the Commission informed Germany of its decision to initiate the procedure provided for in Article 108(2) of the Treaty with regard to the financing of Flughafen Frankfurt Hahn GmbH (‘FFHG’), the operator of Frankfurt Hahn airport, and its financial relations with Ryanair. The formal investigation procedure was registered under the case number SA.21121 (C 29/08).

(2)

By letter of 4 March 2011, Deutsche Lufthansa AG (‘Lufthansa’) provided further information with regard to the ongoing formal investigation procedure in case SA.21121 (C 29/08), alleging new State aid measures in favour of FFHG.

(3)

By letter dated 18 March 2011 the Commission forwarded this submission of Lufthansa to Germany and requested further information on the alleged new State aid measures. By letter dated 5 April 2011, Germany requested an extension of the deadline for providing that information until 15 July 2011. By letter dated 11 April 2011 the Commission granted an extension of the deadline until 18 May 2011 for some of the questions and until 31 May 2011 for the remaining questions. Germany replied by letters dated 19 May 2011 and 23 May 2011.

(4)

However, those replies were incomplete. Therefore, by letter dated 6 June 2011 the Commission sent a reminder pursuant to Article 5(2) of the Council Regulation (EC) No 659/1999 (3). Germany responded by letters dated 14 June 2011 and 16 June 2011.

(5)

By letter dated 13 July 2011 the Commission informed Germany of its decision to initiate the procedure provided for in Article 108(2) of the Treaty with respect to the credit line provided to FFHG by the cash-pool of Land Rhineland-Palatinate, the loan provided by Investitions- und Strukturbank of Land Rhineland-Palatinate (‘ISB’) to FFHG and the guarantee provided by Land Rhineland-Palatinate to FFHG for the ISB loan (‘opening decision’). The formal investigation procedure concerning these aspects was registered under the case number SA.32833 (11/C).

(6)

By letter of 22 July 2011, Germany requested an extension of the deadline for its reply to the opening decision, which was accepted by the Commission on 26 July 2011. The Commission received comments on the opening decision from Germany on 31 August 2011.

(7)

By letter dated 22 December 2011 the Commission requested further information from Germany. By letter of 18 January 2012, Germany requested an extension of the deadline for replying, which was granted by the Commission on the same day. Germany responded to the request for further information dated 22 December 2011 by letter dated 22 February 2012.

(8)

The opening decision was published in the Official Journal of the European Union (4) on 21 July 2012. The Commission invited interested parties to submit their comments on the measures in question within one month of the publication date.

(9)

By letter dated 4 September 2012, the Commission received one submission from a third party, Land Rhineland-Palatinate. The Commission transmitted that submission to Germany by letter dated 7 September 2012. Germany was given the opportunity to provide comments on the submission of the third party within one month. Germany did not provide any comments.

(10)

By letter dated 10 April 2013 the Commission requested further information from Germany. Germany responded by letter dated 17 June 2013.

(11)

By a letter dated 25 February 2014, the Commission informed Germany of the adoption of the 2014 Aviation Guidelines (5) on 20 February 2014, of the fact that those guidelines would become applicable to the case at hand from the moment of their publication in the Official Journal of the European Union, and gave Germany the opportunity to comment on the guidelines and their application within 20 working days of their publication in the Official Journal.

(12)

The 2014 Aviation Guidelines were published in the Official Journal of the European Union on 4 April 2014. They replaced the 1994 Aviation Guidelines (6) as well as the 2005 Aviation Guidelines (7).

(13)

On 15 April 2014 a notice was published in the Official Journal of the European Union inviting Member States and interested parties to submit comments on the application of the 2014 Aviation Guidelines in this case within one month of their publication date (8). Lufthansa and Transport & Environment submitted observations. By letter dated 21 August 2014 the Commission forwarded those observations to Germany. By letter dated 29 August 2014 Germany informed the Commission that it did not have any observations.

(14)

By letters dated 23 March 2014 and 4 April 2014 the Commission requested further information from Germany. Germany replied by letters dated 17 April 2014, 24 April 2014 and 9 May 2014.

(15)

On 17 June 2014, Germany informed the Commission that it exceptionally accepts that this Decision is adopted in English only.

2.   CONTEXT OF THE INVESTIGATION

2.1.   Conversion of the airport and its ownership structure

(16)

Frankfurt Hahn airport is located in Land Rhineland-Palatinate, approximately 120 km west of the city of Frankfurt/Main. Frankfurt Hahn airport was a US military airbase until 1992. Subsequently, it was converted into a civil airport. It holds a 24-hour operating licence.

(17)

Holding Unternehmen Hahn GmbH & Co. KG (Holding Hahn), a public-private partnership between Wayss & Freytag and Land Rhineland-Palatinate, acquired ownership of the infrastructure of Frankfurt Hahn airport from Germany on 1 April 1995. Between 1995 and 1998, this public-private partnership developed the airport with the goal of making it an industrial and commercial area. According to Germany, when the partnership between Wayss & Freytag and Land Rhineland-Palatinate did not turn out to be successful, on 1 January 1998, Flughafen Frankfurt/Main GmbH (Fraport) (*1) started getting involved in the project and eventually took over the operation of the airport.

(18)

Fraport purchased 64,90 % of the shares in the operator Flughafen Hahn GmbH & Co. KG Lautzenhausen (FFHG) for the price of […] (9). Payment of part of the purchase price (EUR […]) was due on 31 December 2007, and was subject to certain conditions (10). In August 1999, Fraport acquired 73,37 % of the shares of Holding Hahn and 74,90 % of the shares of its general partner Holding Unternehmen Hahn Verwaltungs GmbH for the price of EUR […]. Thereby Fraport effectively became the new partner of Land Rhineland-Palatine.

(19)

Fraport's focus at Frankfurt Hahn airport was to systematically develop the passenger and cargo business of the airport. In this respect, Fraport was one of the first undertakings to apply a business model which aimed especially at attracting low-cost airlines. On this basis, Fraport undertook to conclude a new profit and loss transfer agreement with Holding Hahn upon conversion of the latter into a German limited liability company (Gesellschaft mit beschränkter Haftung, GmbH). The conversion and the conclusion of that agreement took place on 24 November 2000.

(20)

Subsequently, Holding Hahn and FFHG merged to form Flughafen Hahn GmbH. Land Rhineland-Palatinate held 26,93 % and Fraport 73,07 % of the shares in the new company. In 2001, the two shareholders, Fraport and Land Rhineland-Palatinate, injected fresh capital into FFHG.

(21)

Until 11 June 2001, 100 % of the shares in Fraport were held by public shareholders (11). On 11 June, Fraport was floated on the stock market exchange and 29,71 % of its shares were sold to private shareholders, the remaining 70,29 % of shares remaining with the public shareholders.

(22)

In November 2002, Land Rhineland-Palatinate, Land Hesse, Fraport and FFHG concluded an agreement on the further development of Frankfurt Hahn airport. That agreement provided for a second increase of the registered capital. On that occasion, Land Hesse acceded to FFHG as a third shareholder. Fraport then owned 65 % of the shares and Land Hesse and Land Rhineland-Palatinate held 17,5 % each. This ownership structure remained unchanged until 2009, when Fraport sold all of its shares to Land Rhineland-Palatinate, which has, since then, held a 82,5 % majority share. The remaining 17,5 % are still held by Land Hesse.

2.2.   Passenger and freight traffic development and airports in the vicinity

(23)

The passenger traffic at Frankfurt-Hahn airport increased from 29 289 in 1998 to 4 million in 2007 and then decreased to 2,7 million in 2013 (see Table 1). The airport is currently served by Ryanair (12), Wizz Air (13) and other airlines. Ryanair's passenger share amounts to approximately [80-100 %].

Table 1

Passenger development at Frankfurt Hahn airport from 1998 to 2013

Year

Number of passengers

Number of Ryanair passengers

1998

29 289

0

1999

140 706

89 129

2000

380 284

318 664

2001

447 142

397 593

2002

1 457 527

1 231 790

2003

2 431 783

2 341 784

2004

2 760 379

2 668 713

2005

3 079 528

2 856 109

2006

3 705 088

3 319 772

2007

4 015 155

3 808 062

2008

3 940 585

3 821 850

2009

3 793 958

3 682 050

2010

3 493 629

[2 794 903 -3 493 629 ]

2011

2 894 363

[2 315 490 -2 894 363 ]

2012

2 791 185

[2 232 948 -2 791 185 ]

2013

2 667 529

[2 134 023 -2 667 529 ]

(24)

Frankfurt-Hahn airport has also experienced a significant growth in air cargo traffic. The air freight at the airport increased from 16 020 tonnes in 1998 to 286 416 tonnes in 2011 and decreased again to 152 503 tonnes in 2013 (see Table 2). The total freight, including freight forwarders, handled at the airport amounted to 446 608 tonnes in 2013.

Table 2

Cargo development at Frankfurt Hahn airport from 1998 to 2010

Year

Total air freight in tonnes

Total freight including freight forwarders in tonnes

1998

16 020

134 920

1999

43 676

168 437

2000

75 547

191 001

2001

25 053

133 743

2002

23 736

138 131

2003

37 065

158 873

2004

66 097

191 117

2005

107 305

228 921

2006

123 165

266 174

2007

125 049

289 404

2008

179 375

338 490

2009

174 664

322 170

2010

228 547

466 429

2011

286 416

565 344

2012

207 520

503 995

2013

152 503

446 608

(25)

The following airports are located in the proximity of Frankfurt Hahn airport:

(i)

Frankfurt Main airport (~ 115 kilometres from Frankfurt Hahn airport, ~ 1 hour 15 minutes travelling time by car) is an international hub airport with a wide variety of destinations, ranging from short- to long-haul. It is predominantly served by network carriers offering connecting traffic, although it also provides point-to-point connections and charter flights. Besides passenger traffic (approximately 58 million in 2013), Frankfurt Main airport also handles air freight (approximately 2 million tonnes in 2013). Figure 1 shows the development of traffic at Frankfurt Main and Frankfurt Hahn airports in 2000-2012.

(ii)

Luxembourg airport (~ 111 kilometres from Frankfurt Hahn airport, ~ 1 hour 30 minutes travelling time by car) is an international airport, providing a wide variety of destinations. In addition to passenger traffic (approximately 2,2 million), it also served 673 500 tonnes of air freight in 2013.

(iii)

Zweibrücken airport (~ 128 kilometres from Frankfurt Hahn airport, ~ 1 hour 35 minutes travelling time by car).

(iv)

Saarbrücken airport (~ 128 kilometres from Frankfurt Hahn airport, ~ 1 hour 35 minutes travelling time by car).

(v)

Köln-Bonn airport (~ 175 kilometres from Frankfurt Hahn airport, ~ 1 hour 44 minutes travelling time by car).

Figure 1

Passenger traffic development at Frankfurt Main and Frankfurt Hahn airports in 2000-2012

Image 1

0 %

1 %

2 %

3 %

4 %

5 %

6 %

7 %

8 %

Year

Frankfurt-Hahn passengers p.a.

%

Frankfurt-Main passengers p.a.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

10 000 000

20 000 000

30 000 000

40 000 000

50 000 000

60 000 000

70 000 000

Ratio Passengers at Frankfurt Main to Frankfurt Hahn 2000-2012 in percent

2.3.   Airport's financial results and an overview of investments undertaken

(26)

Table 3 provides an overview of investments undertaken by FFHG from 2001 to 2012, amounting in total to approximately EUR 216 million.

Table 3

Overview of investments undertaken from 2001 to 2012

In 1 000 EUR

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Total 2001-2012

Investments into infrastructure and equipment

Anlagenzugänge inkl. Umbuchungen

Land

3 174,00

6 488

 

2 994

4 284

3 086

8 613

593

 

[…]

 

 

 

Terminal

 

2 519

3 310

 

 

 

 

251

 

 

 

 

 

Cargo Hangar

 

 

3 850

 

3 222

 

 

 

 

 

 

 

 

Office building

 

 

 

 

 

 

 

2 428

 

[…]

 

 

 

Other infrastructure investments

 

 

10 194

1 152

 

 

13 275

 

 

[…]

[…]

[…]

 

Apron

1 008,30

5 684

 

 

3 394

 

10 224

2 848

 

[…]

[…]

 

 

Other infrastructure

1 502,20

3 848

2 071

2 692

3 911

1 761

1 558

2 608

384

[…]

[…]

[…]

 

Immaterial assets (e.g. IT)

6,1

14,50

28

219

487

45

170

121

20

[…]

[…]

[…]

7 108

Equipment

8 208,89

1 097,09

12 308,42

1 814,00

2 294,54

20 232

7 550

3 823

359

[…]

[…]

[…]

75 550

Total

13 899

19 650

31 761

8 871

17 592

25 123

41 390

12 673

763

17 289

19 346

7 930

216 287

(27)

Table 4 provides an overview of the annual financial results of FFHG from 2001 to 2012.

Table 4

Annual financial results of FFHG in 2001 to 2012

In 1 000 EUR

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Profit and loss statement

Revenues

10 077,61

14 908,11

22 574,22

29 564,18

36 859,08

43 479,85

41 296,34

45 383,60

42 036,70

43 281,58

43 658,38

40 983,45

Other revenues (including compensation for public policy remit)

7 771,31

5 514,63

3 686,87

3 039,35

3 618,93

6 097,29

5 436,58

4 858,16

11 540,36

14 554,55

9 313,99

21 390,92

Total Revenue

17 848,92

20 422,75

26 261,09

32 603,53

40 478,01

49 577,14

46 732,92

50 241,76

53 577,06

57 836,14

52 972,37

62 374,37

Costs of material

– 7 092,39

– 10 211,13

– 12 560,46

– 14 601,17

– 17 895,97

– 24 062,81

– 22 491,85

– 25 133,61

– 24 979,59

– 27 650,17

– 20 017,99

– 21 871,65

Costs of personnel

– 9 185,12

– 9 672,37

– 10 734,62

– 11 217,21

– 12 101,84

– 13 337,28

– 14 433,17

– 15 758,34

– 15 883,08

– 17 893,60

– 18 228,23

– 18 349,10

Other costs (including marketing)

– 5 692,81

– 11 434,31

– 10 521,27

– 11 454,36

– 14 058,15

– 12 885,28

– 9 897,46

– 9 630,21

– 7 796,81

– 8 029,40

– 6 760,92

– 6 643,00

EBITDA

– 4 121,41

– 10 895,06

– 7 555,27

– 4 669,21

– 3 577,94

– 708,22

– 89,56

– 280,39

– 4 917,58

– 4 262,96

– 7 965,23

– 15 510,62

EBITDA (excl other revenues)

– 11 892,72

– 16 409,69

– 11 242,13

– 7 708,56

– 7 196,87

– 6 805,51

– 5 526,13

– 5 138,56

– 6 622,78

– 10 291,59

– 1 348,76

– 5 880,30

Depreciation

– 5 325,63

– 5 674,68

– 6 045,39

– 7 699,33

– 7 973,46

– 10 527,90

– 10 191,89

– 11 855,19

– 12 482,28

– 11 827,19

– 13 297,31

– 12 733,48

Financial results (interest received — interest paid)

– 2 896,64

– 3 013,42

– 4 006,57

– 4 105,53

– 4 548,42

– 4 588,16

– 5 235,30

– 5 693,02

– 4 915,39

– 2 778,06

– 5 063,04

– 8 177,54

Extraordinary revenues and costs

– 431,54

– 206,00

– 10,46

0,00

0,00

0,00

0,00

0,00

0,00

– 272,55

0,00

0,00

Taxes

– 580,13

– 204,74

– 215,18

– 323,82

– 228,44

– 242,33

– 245,00

– 238,66

– 257,45

– 240,85

– 231,03

– 277,52

Coverage of losses by Fraport trough the profit and loss transfer

13 355,35

19 993,90

17 832,87

16 797,89

16 328,26

16 066,61

15 761,75

18 067,26

5 621,37

0,00

0,00

0,00

Annual result (profit/loss)

0,00

0,00

0,00

0,00

0,00

0,00

0,00

0,00

– 7 114,17

– 10 855,69

– 10 626,14

– 5 677,92

3.   DESCRIPTION OF THE FACTS AND GROUNDS FOR INITIATING THE PROCEDURE

(28)

The opening decision covers financing arrangements put into place in 2009 to 2011 and raised the following questions:

(i)

first, whether the credit line provided by the cash-pool of Land Rhineland-Palatinate was provided at market conditions and thus did not constitute State aid, or if it did constitute State aid, whether such State aid could be considered compatible with the internal market;

(ii)

second, whether the loans provided by ISB to FFHG and the underlying guarantee provided by Land Rhineland-Palatinate to FFHG were granted at market conditions, and thus did not constitute State aid, or if they did constitute State aid, whether such State aid could be considered compatible with the internal market.

3.1.   Credit line provided by the cash-pool of Land Rhineland-Palatinate

(29)

Since 19 February 2009 FFHG has been included in the cash-pool of Land Rhineland-Palatinate. The aim of the cash-pool is to optimise the use of liquidity within the different holdings, foundations and public undertakings of the Land.

(30)

The participation of the different undertakings and foundations in the cash-pool is based on a Memorandum of Understanding between the undertaking/foundation concerned and the Ministry of Finance of Land Rhineland-Palatinate. In the event that the liquidity demand exceeds the available funds within the cash-pool, the liquidity gap is financed on short-term basis on the capital market.

(31)

The current credit line for FFHG in the cash-pool of Land Rhineland-Palatinate is EUR 45 million. By 25 March 2013, FFHG had used 100 % (EUR 45 million) of its credit line.

3.2.   Refinancing of FFHG's loans by the Investitions- und Strukturbank of Land Rhineland-Palatinate

(32)

After Land Rhineland-Palatinate became the majority shareholder of FFHG, its long-term loans were refinanced in 2009 by ISB. Three of the loans, namely loans numbers 1, 3 and 4 (see Table 5) were granted at a fixed interest rate for the whole duration of the respective loans, while loans numbers 2 and 5 have a variable interest rate. Table 5 summarises the conditions of the loans provided by ISB.

Table 5

FFHG's loans provided by ISB

No

Bank

Loan amount in EUR million

Duration

Interest rate

Interest Swap

1

ISB

18,4

[approx. 8 years]

[> 3 %; < 4,5 %]

 

2

ISB

20,0

[approx. 5 years]

[< 12] month EURIBOR plus [< 1 %]

[…]

3

ISB

2,5

[approx. 2 years]

[> 3 %; < 4,5 %]

 

4

ISB

25,9

[approx. 7 years]

[> 3 %; < 4,5 %]

 

5

ISB

6,8

[approx. 3 years]

[< 12] month EURIBOR plus [< 1 %]

[…]

(33)

FFHG has also signed two interest rate swap agreements with IKB Corporate Lab. The agreements hedge against fluctuations of the variable part of the interest rate of loans numbers 2 and 5 (see Table 5), namely the 6-month and the 3-month Euribor respectively. The swap agreements were signed in 2004 and 2005 (in relation to the loans provided at that time, which the current financing replaced).

(34)

The repayment conditions of the various loans provided by ISB differ. Loans numbers 1, 3, 4 and 5 are amortising loans, while loan number 2 is a bullet loan repaid at maturity. Table 6 summarises the repayment conditions of those loans.

Table 6

Repayment conditions of the ISB loans

No

Bank

Loan amount in EUR million

Repayment conditions/due date

1

ISB

18,4

Semi-annual repayment on 30 June and 30 December of every year, last repayment rate due on […]

2

ISB

20,0

Bullet loan due on […]

3

ISB

2,5

Semi-annual repayment on 30 April an 30 October of every year, last repayment rate due on […]

4

ISB

25,9

Semi-annual repayment on 30 June and 30 December of every year, last repayment rate due on […]

5

ISB

6,8

Quarterly repayment of […], last repayment rate due […]

(35)

All the loans are 100 % guaranteed by Land Rhineland-Palatinate. For the provision of the guarantees FFHG pays a guarantee premium of [0,5 % to 1,5 %] per annum (‘p. a.’) to the guarantor.

3.3.   Compatibility of possible State aid to FFHG

(36)

In the opening decision, the Commission expressed doubts as to whether the credit line provided by the cash-pool of Land Rhineland-Palatinate mentioned in Section 3.1 and the loans and guarantee mentioned in Section 3.2 would be compatible with the internal market in the absence of the compatibility conditions for operating aid under the 2005 Aviation Guidelines, if they constituted State aid.

4.   COMMENTS FROM GERMANY

(37)

Generally, Germany asserted that neither of the two measures investigated in this procedure constitutes State aid within the meaning of Article 107(1) of the Treaty as there was no economic advantage conferred on FFHG taking into account all relevant circumstances. Alternatively, Germany argued that should the Commission consider that these measures do constitute aid within the meaning of the Treaty, then the aid should be deemed compatible with the internal market.

4.1.   The specific situation of Frankfurt-Hahn Airport in 2009

(38)

Germany considered that the specific situation of the airport and background of the financial measures concerned must be taken into account when assessing these financial measures concerned. In this regard Germany referred to the following three circumstances:

(39)

Firstly, concerning the background of the measures, Germany pointed out that FFHG had financed the majority of its investments during and after the transformation from a military airport to a commercial airport through loans. According to Germany, FFHG therefore had a large amount of long-term financial obligations, unlike other airports.

(40)

Secondly, Germany argued that a refinancing of FFHG's loans was inevitable because Fraport had sold its shares to the Land Rhineland-Palatinate as of 1 January 2009. Before the sale, the profit-and-loss transfer agreement (‘Beherrschungs- und Gewinnabführungsvertrag’, PLTA) obliged Fraport to ensure the financing of the long-term debts of FFHG and to cover its possible losses. Germany explained further that after Land Rhineland-Palatinate had acquired the shares, that PLTA was ended, so a refinancing of FFHG's obligations was necessary. According to Germany, with these measures Land Rhineland-Palatinate only aimed at maintaining the financial situation of FFHG.

(41)

Thirdly, Germany emphasised especially the fact that a private undertaking would have financed FFHG under the same conditions as the Land Rhineland-Palatinate did and that those conditions are in line with the market economy lender principle. Germany submitted that the Commission has to take into account the commercial transaction as a whole and all the circumstances of the particular case, especially the fact that the Land holds the vast majority of the shares.

4.2.   Aid nature of the credit line provided by the cash-pool of Land Rhineland-Palatinate

4.2.1.   The funding of the cash-pool

(42)

Germany stated that the cash-pool is a financial instrument established in 2002 by the Land. The Land's institutions and foundations and all undertakings governed by private law, of which the Land owns more than 50 %, can participate in the cash-pool. Germany explained that the daily account balance of the cash-pool is managed by the ‘Landeshauptkasse’ of the Land.

(43)

Germany considered that the cash-pool is not financed directly out of the budget of the Land, but from the surplus of cash of the participants. It explained further that a surplus of cash in the cash pool was invested on the capital markets; in the same way, a deficit is balanced by funds obtained on the capital market. Thus, Germany asserted that any financial support from the cash-pool would not be granted through state resources, and would also not be imputable to the state.

(44)

Germany also provided data to show the overall balance (deposits of participating undertakings and drawn credit lines) of the cash-pool as summarised in Figure 2.

Figure 2

Overall development of the funding of the cash-pool of the Land 2009-2013 (in EUR million)

Image 2

Total of deposits

Balance of the cash pooling facility

Total of drawn credit lines

300

200

100

0

– 100

– 200

– 300

– 400

– 500

– 600

– 700

– 800

Jan-09

Apr-09

Jul-09

Oct-09

Jan-10

Apr-10

Jul-10

Oct-10

Jan-11

Apr-11

Jul-11

Oct-11

Jan-12

Apr-12

Jul-12

Oct-12

Jan-13

Apr-13

Jul-13

Oct-13

4.2.2.   Economic advantage

(45)

Germany argued that FFHG did not obtain an economic advantage within the meaning of Article 107(1) of the Treaty by being included in the cash-pool of the Land. According to Germany, the Reference Rate Communication (14) should not be applied in a strict manner as it does not take into account that Land Rhineland-Palatinate holds the vast majority of the shares of FFHG.

(46)

Germany explained that even though the credit line was granted for a longer period, in principle the loans are due on a daily basis. Hence Germany argued that the drawn credit line corresponds to a short-term loan. Figure 3 shows the use of the credit line by FFHG.

Figure 3

Overview of the drawing on the credit line of the cash-pool by FFHG between 3/2009 and 8/2013 (in EUR)

Image 3

– 5 000 000

– 10 000 000

– 15 000 000

– 20 000 000

– 25 000 000

– 30 000 000

– 35 000 000

– 40 000 000

– 45 000 000

– 50 000 000

Drawn credit line

1.3.2009

1.5.2009

1.7.2009

1.9.2009

1.11.2009

1.1.2010

1.3.2010

1.5.2010

1.7.2010

1.9.2010

1.11.2010

1.1.2011

1.3.2011

1.5.2011

1.7.2011

1.9.2011

1.11.2011

1.1.2012

1.3.2012

1.5.2012

1.7.2012

1.9.2012

1.11.2012

1.1.2013

1.3.2013

1.5.2013

1.7.2013

(47)

With regard to the ranking and collateralisation of the cash-pool obligations, Germany stated that the FFHG's cash-pool obligation is ranked at the same level as all its other obligations. Germany pointed out that even though no collaterals are required from the undertakings benefiting from the cash-pool, they are under the Land's supervision and the Land could always request as majority shareholder of FFHG to collateralise the drawn loans. Moreover, Germany pointed out that cash-pool facilities were a usual and a very common market practice. In Germany's view, the cash-pool pursues the goal of balancing the liquidity between the companies owned by the Land.

(48)

Particularly with regard to the indication in the opening decision that in absence of a rating the risk margin should have been set at 1 000 basis points, Germany argued that in its opinion no private holding would add 1 000 basis points to the base lending rate for a shareholder loan granted to its subsidiary if it pursued the economic and structural interests of a holding. Germany added that the interest rate for FFHG corresponded approximately to the European overnight index average. Figure 4 shows the interest rate charged for FFHG for the use of the credit line in 2012 and 2013.

Figure 4

Development of the interest rate charged to FFHG for the drawing on the cash-pool in 1/2012-8/2013

Image 4

Interest rate

1.1.2012

1.2.2012

1.3.2012

1.4.2012

1.5.2012

1.6.2012

1.7.2012

1.8.2012

1.9.2012

1.10.2012

1.11.2012

1.12.2012

1.1.2013

1.2.2013

1.3.2013

1.4.2013

1.5.2013

1.6.2013

1.7.2013

1.8.2013

0,400 %

0,350 %

0,300 %

0,250 %

0,200 %

0,150 %

0,100 %

0,050 %

0,000 %

(49)

As regards the indication in the opening decision that the risk margin would normally be set on the basis of an assessment of the probability of default by FFHG, Germany pointed out that by including FFHG in the cash-pool, the Land Rhineland-Palatinate did not grant a loan to a third party, but offered a shareholder loan to its own subsidiary. Germany further stated that, as a shareholder, the Land was well aware of the probability of default by FFHG and did not require an external assessment, as it had all the necessary information.

(50)

Germany also provided ratings of FFHG established on the basis of Moody's credit-scoring model (15) for the period 2009 to 2014, as summarised in Table 7 below. Germany stated that these ratings were established on the basis of the financial statements of FFHG per 31 December of the preceding year and the available business plans.

Table 7

Overview of the credit ratings of FFHG in 2009 to 2014

Period of time

Assumed duration (16)

Stand-alone credit rating of the FFHG

(Moody's rating scale)

Adjusted credit rating (17)

(Moody's rating scale)

1 January 2009-31 December 2010

2 Years

[Ba1-B3] (18)

[Baa3-B2] (19)

1 January 2011-31 December 2011

1 Year

[Ba1-B3] (18)

[Baa3-B2] (19)

1 January 2012-31 December 2012

1 Year

[Ba1-B3]

[Baa3-B2]

1 January 2013-31 December 2014

2 Years

[Ba1-B3]

[Baa3-B2]

Source: KPMG Memorandum of 7 June 2013.

(51)

Consequently, Germany submitted that by being included in the cash-pool of the Land, FFHG did not obtain any economic advantage, and that therefore the access to the cash-pool did not constitute State aid.

4.3.   Aid nature of the loans and the guarantee granted to FFHG

4.3.1.   Market conformity of ISB loans

(52)

Germany stated that FFHG did not obtain any advantage from the refinancing of the ISB loans. In Germany's opinion, the ISB loans were comparable to the loans granted by Nassauische Sparkasse in 2005. According to Germany, the collateralisation of the ISB loans was also comparable to the loans of Nassauische Sparkasse.

(53)

Germany stated that, according to the case-law of the Court of Justice (20), aid is defined as interventions that mitigate the charges which are normally included in the budget of an undertaking. Germany argued that if those charges stay at the same level, there cannot be any aid. Germany highlighted that the interest paid under the loans refinanced by ISB was in total [EUR 80 000 to EUR 130 000] higher than compared to the previous financing arrangements. In addition, Germany pointed out that FFHG had to pay a premium of [300-340] and [340-410] basis points to the base lending rate. Germany stated that, according to the Reference Rate Communication, those rates correspond to an undertaking with a satisfactory rating ([BB+ to BB-] on Standard and Poor's rating scale) and a low level of collateralisation or weak rating ([B+ to B-] on Standard and Poor's rating scale) and a normal level of collateralisation.

(54)

Germany explained that in 2009, in preparation of the new financing, FFHG commissioned Deutsche Bank to provide a risk margin indication for the refinancing of its existing loans. Germany submitted the assessment of Deutsche Bank (21), which had been prepared on the basis of the three latest annual reports (2006-2008) of FFHG. Furthermore, Germany explained that that assessment did not take into account the business plan of FFHG as it was reviewed at the time. With regard to the assessment of Deutsche Bank, Germany stated that on the basis of its analysis Deutsche Bank puts FFHG in the [<BBB+] rating category (22), however it does not specify an exact rating for the company.

(55)

Germany clarified that in the analysis of Deutsche Bank the specific ownership conditions of FFHG (such as that it is owned by public authorities as well as the high importance of the company for the local economy) were taken into account. Germany pointed out that according to Deutsche Bank any lender would take into account these circumstances when providing a loan to FFHG. According to Germany this means that even though the stand-alone rating of FFHG was [<BBB+], its adjusted rating (taking into account the specific ownership conditions) would be higher (23).

(56)

In this regard, Germany clarified further that Deutsche Bank has provided an indication for the applicable risk margin for two alternative financing structures — one based on the adjusted rating of FFHG (without collateral, that is to say, referring to a situation without an explicit state guarantee provided by the main shareholder of FFHG — the Land Rhineland-Palatinate), and one with a 100 % guarantee provided by the Land Rhineland-Palatinate. Germany pointed out that the analysis of Deutsche Bank showed that in the first case (without collateral, based on the adjusted credit rating) the applicable risk margin for a 5-year loan would be between [1,3 % and 2,05 %] p.a. According to Germany, in the second case (with a guarantee covering 100 % of the loans) the applicable risk margin would be between [0,25 % and 0,7 %] p.a. (24).

(57)

To support the analyses conducted by Deutsche Bank, Germany also provided the 2010 rating prepared by Volksbank, which assigned FFHG a rating of […] according to its internal rating scale (25). Furthermore, Germany explained that in 2011 Kreisspaarkasse Birkenfeld assigned FFHG a rating of […] according to its rating scale (26).

(58)

Germany also provided ratings of FFHG established on the basis of Moody's credit-scoring model at the time the ISB loans were granted (see Table 8).

Table 8

Overview of the credit ratings of FFHG at the time the ISB loans were granted

Bank

Duration

Duration in years

Stand-alone credit rating of FFHG

(Moody's rating scale)

Adjusted credit rating (27)

(Moody's rating scale)

ISB

[approx. 8 years]

[approx. 8 years]

[B2-Baa3]

[B1-Baa2]

ISB

[approx. 5 years]

[approx. 5 years]

[B2-Baa3]

[B1-Baa2]

ISB

[approx. 2 years]

[approx. 2 years]

[B2-Baa3]

[B1-Baa2]

ISB

[approx. 7 years]

[approx. 7 years]

[B2-Baa3]

[B1-Baa2]

ISB

[approx. 3 years]

[approx. 3 years]

[B2-Baa3]

[B1-Baa2]

Source: KPMG Memorandum of 7 June 2013.

(59)

Germany argued that FFHG is to be considered as an undertaking with a good rating because it has a high level of collateralisation (all assets of FFHG could be used as collateral) and a good equity-ratio of around 30 % despite the fact that FFHG has been loss-making and because Land Rhineland-Palatinate — as shareholder of FFHG — provided a guarantee for the loan.

(60)

In addition, Germany stressed that FFHG and ISB negotiated the conditions of the loans and that those negotiations were not influenced by the Land Rhineland-Palatinate.

(61)

Consequently, Germany was of the opinion that the ISB loans granted to FFHG were on market terms, and that, therefore, those loans do not constitute State aid.

4.3.2.   Market conformity of the guarantee granted by Land Rhineland-Palatinate

(62)

Germany stated that it is very common for holding companies to guarantee financial obligations of their subsidiary. Moreover, Germany argued that the guarantee by Land Rhineland-Palatinate meets the requirements of the guarantee notice (28). Admitting that the guarantee collateralised 100 % instead of 80 % of the loan amount (as the guarantee notice requires), Germany pointed out that this is due to the fact that Land Rhineland-Palatinate took over the guarantees of Fraport which also amounted to 100 %. In this regard, Germany stated that as a collateralisation of 100 % existed before, by taking over the collateralisation, Land Rhineland-Palatinate only maintained the status quo. Thus, in Germany's opinion, FFHG did not receive any economic advantage.

(63)

In addition to that, Germany submitted that FFHG could have offered other collaterals (such as land property, buildings and other fixed assets), which were not necessary because the Land held the vast majority of the shares of FFHG. Therefore, Germany asserted that the conditions of the loan would not necessarily have altered if the Land had not granted a guarantee.

(64)

Furthermore, Germany pointed out that FFHG pays a market fee for the guarantee. To support this, Germany referred to the Deutsche Bank study, as mentioned in recital 56. In this context, Germany clarified that Deutsche Bank determined that the guarantee fee would be between [0,5 % and 1,5 %] (29). Germany stated that because FFHG was developing well when the guarantee was issued, the fee was set at [0,5 % to 1,5 %]. Against this background, Germany pointed out that, as this guarantee fee is within the margin determined by the Deutsche Bank expertise, it must be considered as being in line with the market.

(65)

In conclusion, Germany emphasised that FFHG did not receive an economic advantage within the meaning of Article 107(1) of the Treaty either through the cash-pool or through the ISB loans or through the underlying guarantee.

4.4.   Compatibility of the measures with the internal market

4.4.1.   Assessment of compatibility of the investment aid

(66)

Germany submitted that, even if the financing provided to FFHG constitutes aid, that aid would be compatible with the internal market under the Article 107(3)(c) of the Treaty.

(67)

In particular with regard to the ISB loans and the underlying guarantee, Germany asserted that the ISB loans refinanced existing loan agreements which were concluded with the aim of financing infrastructure measures at Frankfurt Hahn airport. In this regard, Germany submitted that the ISB loan No 1 refinanced a loan that was intended to finance the 2007 and 2008 investments into the equipment of Frankfurt Hahn airport, whereas the ISB loan No 2 was intended to refinance a loan financing investments conducted at the airport in 2002. According to Germany, the ISB loan No 3 also refinanced investments in the transformation of a cargo hangar into a passenger terminal and other infrastructure extension measures. Germany further submitted that the ISB loans Nos 4 and 5 also refinanced loans financing investments in 2004 to 2006. Thus, Germany argued that the loans do not constitute operating aid, but investment aid that complies with the compatibility conditions set out in the 2005 Aviation Guidelines. The following recitals contain the analysis of compliance with each of those conditions.

(a)   Contribution to a well-defined objective of common interest

(68)

As regards the condition that the measure must contribute to a well-defined objective of common interest, Germany submitted that the objective of the financing of airport infrastructure at Frankfurt Hahn airport was always to improve the economic structure of the economically underdeveloped and scarcely populated Hunsrück region.

(69)

In this regard, Germany stated that, firstly, the objective of supporting FFHG was to help overcome the weak structural economy of the Hunsrück region. Germany asserted that Frankfurt Hahn airport is surrounded by a number of areas considered as regions in need of support within the framework of Gemeinschaftsaufgabe ‘Verbesserung der regionalen Wirtschaftsstruktur’  (30), a task shared by the federal and local governments. In this regard, Germany submitted that the four regions around the airport, namely Landkreis Bernkastel-Wittlich, Birkenfeld, Cochem-Zell and Rhein-Hunsrück-Kreis, are on average only half as densely populated as the rest of Land Rhineland-Palatinate. Germany pointed out that for those districts whose economy is shaped by small and medium-sized enterprises, employment is the main anchor against a further decrease of the regional economy and Frankfurt Hahn airport plays an important role as an employer and client.

(70)

Secondly, Germany argued that Frankfurt Hahn airport plays an important role in the strategic development of incoming (~ 33 % of passengers corresponding to approximately 1 million passengers in 2005) and outgoing tourism (~ 67 % of passengers) for the Land Rhineland-Palatinate. Germany stated that 88 % of the incoming passengers are staying several nights in the region. Germany submitted that the Frankfurt Hahn airport's incoming tourists generated approximately 5,7 million overnight stays in 2005 (31). According to Germany the number of overnight stays further increased, Land Rhineland-Palatinate welcomed 8,2 million guests in 2011, which generated 21,5 million overnight stays. Germany pointed out that the number of guests from eastern and southern European countries, in particular, has increased and that a large number of flights are operated from those countries to Frankfurt Hahn. This has resulted in about 198 000 jobs being generated by tourism in Rhineland-Palatinate, according to Germany. The catalysed income and employment effects stem especially from incoming tourism, in which Frankfurt Hahn airport plays a central role as the gateway for tourists into the Hunsrück region, but also into Rhineland-Palatinate more generally, as Germany explained. Germany stated that between 1990 and 2001 the number of tourists has increased by 70 % for the Hunsrück region and by 35 % for Rhineland-Palatinate. According to Germany, during the same period, the number of tourists coming from abroad has increased by 163 % in the Hunsrück region. Since 88 % of incoming tourists from Frankfurt Hahn stay at least one night and more than 80 % of those even stay two to 10 days, they generate a total benefit of about EUR 133,7 million per year. Furthermore, Germany argued that outgoing tourism (67 %) also generates income for Frankfurt Hahn airport through non-aeronautical revenues.

(71)

Thirdly, Germany stated that, taking into account all parts of the airport activities, Frankfurt Hahn airport created 3 063 jobs in the Hunsrück region in 2012 out of which 74 % were full-time positions. According to Germany, 90 % of those employees also live in the region. Germany argued that Frankfurt Hahn airport helps to prevent the movement of young, qualified employees towards other regions as well as an economic and social decline of the regional communities and their infrastructure. Furthermore, Germany pointed out that the presence of Frankfurt Hahn airport not only produces the aforementioned direct effects for the labour market, but also has enormous indirect, induced and catalysing effects through an increasing number of economic and touristic activities. In this respect, Germany referred to positive secondary effects for the region, namely less unemployment and more tax payers, thereby providing more money for the municipalities in the regions to support the local economy. In total, the airport generated around 11 000 jobs through incoming tourism for the whole Rhineland-Palatinate.

(72)

Germany argued that the financing of infrastructure at Frankfurt Hahn airport has also helped to achieve the well-defined objective of common interest to combat air traffic congestion at major Union hubs. In this regard Germany pointed to the fact that the capacity limits of Frankfurt Main airport have been constantly exceeded. Germany submitted that especially in the light of its 24-hour operating licence, Frankfurt Hahn airport was therefore serving to provide additional capacity in order to relieve the congestion at Frankfurt Main airport.

(73)

Furthermore, Germany submitted that supporting Frankfurt Hahn airport also serves the objective of common interest of increasing the mobility of Union citizens. In this regard, Germany pointed out that Frankfurt Hahn airport is the only German airport offering direct flights to Kaunas (Latvia), Kerry (Ireland), Kos (Greece), Montpellier (France), Nador (Morocco), Plovdiv (Bulgaria), Pula (Croatia), Rhodos (Greece), Santiago de Compostela (Spain) and Volos (Greece). Also, according to Germany, Frankfurt Hahn airport contributes to the job mobility of young people, who can reach the region Hunsrück and Rhineland-Palatinate region at low prices. Similarly, Germany pointed out that the high-quality universities and institutions of higher education in Koblenz, Mainz, Kaiserslautern, Trier, Wiesbaden, Mannheim, Bonn, etc., where for the most part no tuition fees apply, are now easily accessible to students from all over the Union.

(74)

Germany argued, moreover, that it is also of common interest that the Hunsrück region and the surrounding regions of Rhineland-Palatinate are connected to other peripheral regions, for example Limerick, which has already manifested itself through city partnerships. As the fourth biggest national economy in the world, Germany stated that it is focussing not only on connecting to the major European hubs, but also on connecting the regions with each other. According to Germany, becoming more independent from the major hubs such as Heathrow, Charles de Gaulle, Schiphol or Frankfurt/Main, is important for the Union since it will mean not only more direct connections, but also more reliability especially for the freight business as regional airports are less prone to cancellations due to weather, strikes, terrorism or cancellation due to cancellation risks.

(75)

Lastly, Germany generally emphasised that the proximity Zweibrücken airport does not lead to a duplication of airports for the same catchment area, due to the distance of 127 km between Frankfurt Hahn airport and Zweibrücken airport. According to Germany, this distance translates into a travelling time of 1 hour and 27 minutes by car or of around 4 hours by train. Therefore, Germany argued that no reasonable worker, freight carrier or tourist whose point of departure lies in the Hunsrück region would go to Zweibrücken airport instead of Frankfurt Hahn airport in order to reach his final destination. Furthermore, Germany submitted that, looking at passenger and air freight traffic between 2005 and 2012, no relationship of substitution between the airports can be deduced. According to Germany, the main market shares of Frankfurt Hahn airport comes from the Hunsrück-Mosel-Nahe region (see Figure 5).

Figure 5

Market shares in passenger air transport of Frankfurt Hahn airport in 2013  (*2)

Image 5

≼ 2 %

≽2 % bis 5 %

≽5 % bis 10 %

≽10 % bis 20 %

≽ 20 %

Airport

Flughafen Frankfurt-Hahn

Market Shares 2013

(b)   The infrastructure is necessary and proportionate to the objective

(76)

Germany considers that the financed investments are necessary and proportionate to the objective of common interest (see recital 68 and following). According to Germany, the investments were undertaken according to the needs and the constructed infrastructure was necessary for the airport in order to guarantee connectivity, to allow for the development of the region and to decongest Frankfurt Main airport. Germany pointed out that the infrastructure was not disproportionate or too opulent for the needs of users of the airport. Hence, Germany considered that this compatibility condition was met.

(c)   The infrastructure has satisfactory medium-term prospects for use

(77)

Germany submitted that before the decision to extend the airport infrastructure was taken, Fraport commissioned traffic forecast studies in order to identify the traffic potential for Frankfurt Hahn airport. Germany provided those studies which were prepared by aviation experts on behalf of Fraport. Figure 6 and Figure 8 summarise the results of one of those studies regarding the expected passenger and freight traffic development at Frankfurt Hahn airport between 2000 and 2011.

Figure 6

Total potential passengers at Frankfurt Hahn airport in 2000-2010

Image 6

,

,

,

,

,

Passengers (millions)

5,0

4,0

3,0

2,0

1,0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Charter

Low cost

Source: SH&E

Total potential Passengers for Hahn Airport

,

,

,

,

,

,

Figure 7

Potential low-cost passenger traffic (under the assumption that Ryanair sets a base that means that it would base/station its aircraft at the airport overnight) at Frankfurt Hahn airport in 2001-2011

Image 7

Based aircraft

Existing routes

,

,

,

,

,

,

,

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Potential Low Cost Traffic

Scenario 2: Ryanair sets a base at HHN

Source: SH&E

,

,

,

,

3,5

3,0

2,5

2,0

1,5

1,0

0,5

Million Passengers

Figure 8

Total potential freight traffic at Frankfurt Hahn airport in 2001-2010