Low-cost airlines Ryanair and Malta Air won a court case Wednesday, December 20, against the European Union's decision to approve billions of euros in state aid by the French government to Air France and holding company Air France-KLM during the Covid-19 pandemic.
Ryanair has filed several court challenges against measures introduced by EU countries to help some airlines weather the fallout of coronavirus restrictions. The Irish airline welcomed the decision and urged the European Commission "to order France to immediately recover this multi-billion euro illegal state aid package."
Back in 2020, French authorities notified the European Commission of an aid measure of €7 billion, which was supposed to solely benefit Air France, to the exclusion of all the other companies in the Air France-KLM group. A year later, France told the Commission about plans for €4 billion recapitalization of Air France and the holding company. In both cases, the European Commission didn't raise objections.
The bloc's 27 members must seek approval from the Commission, the EU's executive branch, when granting financial support to companies. Many countries across Europe did so to help keep their airlines afloat during the pandemic.
But the European General Court ruled that the Air France-KLM holding and KLM "were capable of benefiting, at least indirectly, from the advantage granted by the state aid at issue" and annulled the European Commission's decisions. "Where there are grounds to fear the effects on competition of an accumulation of state aid within the same group, the onus is on the Commission to exercise particular vigilance in examining the links between the companies belonging to that group," the court said.
Third such case
Air France-KLM and Air France said they will consider whether to lodge an appeal before the Court of Justice of the EU. "In parallel, they will contribute to any exchange between the French state and the European Commission with a view to the adoption of possible new approval decisions," the companies said.
The European Commission is also the EU's anti-trust watchdog. As pandemic restrictions in 2020 brought travel to a halt and threatened the existence of airlines, the Commission eased its policies, approving billions of euros in support for national flag carriers.
Under a fast-track system set up during what the Commission described as "an unprecedented crisis," Brussels approved around €3 trillion in state support across all sectors in member nations. Ryanair believes that €40 billion was granted to Europe's airline sector alone.
The EU General Court had previously ruled in other cases that the European Commission had been wrong to approve massive bailouts designed to help German flag-carrier Lufthansa and Scandinavian airline SAS deal with the impact of the pandemic restrictions. It also annulled approval of $140 million of Covid-19 aid for Italian airlines.