LUXEMBOURG (CN) — Budget airline Ryanair lost a challenge to a competitor's coronavirus pandemic support package before the European Union’s second-highest court on Wednesday.
The Luxembourg-based European General Court found that the European Commission, the EU's executive branch, had not erred when it approved a 150 million euro ($177 million) bailout for Austrian Airlines during the Covid-19 crisis.
“The applicants are not justified in complaining that the Commission failed to examine the compatibility of that measure with the freedom of establishment and the free provision of services,” the five-judge panel's ruling states.
The Austrian flag carrier’s bailout was one of several that the commission approved in 2020 for airlines badly hit by the grounding of flights to halt the spread of the virus.
Irish budget airline Ryanair, together with Laudamotion, a low-cost Austrian airline, contested the EU’s decision to greenlight the aid, arguing it constituted illegal state aid in violation of EU trade rules.
Margrethe Vestager, the EU's competition policy czar, defended the bailout last year when the commission approved the deal.
“The €150 million public support measure will enable Austria to partly compensate Austrian Airlines for the damage it directly suffered due to the travel restrictions implemented to limit the spread of the coronavirus. The aviation sector has been hit particularly hard by the coronavirus outbreak,” Vestager said at the time. The package also contained a 300 million euro ($354 million) loan from a group of private banks.
The General Court's 10th Chamber agreed with that reasoning Tuesday.
“The measure at issue is intended to remedy the damage caused by the cancellation and rescheduling of AUA flights due to the imposition of travel restrictions and other containment measures linked to the Covid-19 pandemic,” the ruling states.
Headquartered in Vienna, Austrian Airlines is a subsidiary of German airline Lufthansa, which has a separate state aid case pending before the EU's highest court, the European Court of Justice, alleging German state support for an airport unfairly benefited Ryanair. The German flag carrier lost before the General Court and appealed to the top court.
In a statement Wednesday, Ryanair said it will appeal the General Court's ruling in favor of Austrian Airlines to the Court of Justice.
“While the Covid-19 crisis has caused damage to all airlines that contribute to the economy and the connectivity of Austria, the Austrian government decided to support only its inefficient former 'national' airline (now German-owned), discriminating against all others in clear breach of the fundamental principles of EU law,” Ryanair said. (Parentheses in original.)
The low-cost airline’s long-standing crusade against competitor bailouts, despite receiving a $825 million loan from the Bank of England, has had mixed success in Luxembourg. In May, it won in a similar case over billions in aid for Dutch flag carrier KLM and Portuguese flag carrier TAP, and last month the General Court agreed with Ryanair that a German bailout of a charter airline was improper.
But the court also rejected a complaint about Spain’s bailout of various companies, including local airlines, as well as similar complaints from Ryanair about Finland and Denmark’s bailouts of Scandinavian Airlines, Sweden’s support for Scandinavian Airlines and France’s bailout of Air France.
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