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EU court tosses Ryanair challenge to Covid bailout for rival airline

The budget carrier lost yet another challenge to government support packages for competing airlines hit hard during the Covid-19 pandemic.

LUXEMBOURG (CN) — Irish airline Ryanair failed to convince the European Union’s second-highest court that Finland’s financial support for carrier Finnair violated state aid rules. 

The Luxembourg-based European General Court sided with the European Commission on Wednesday, ruling that Brussels had properly approved the 286 million euro ($300 million) bailout package in June 2020. 

The budget carrier claimed Brussels unfairly helped national airlines — what it derisively dubs inefficient “zombie flag carriers” — by funneling aid to keep them from going bankrupt during the travel shutdown caused by the coronavirus pandemic. Last year, the same court rejected complaints by the Dublin-based airline over support for Air France, Stockholm-based SAS and a separate package for Finnair

In response to the Covid-19 crisis, the European Commission loosened EU state aid restrictions in March 2020.

“Finnair ensures the essential domestic and international connectivity needs of Finland. Given the geographic location of the country, the national economy, many jobs and the development of foreign trade rely on these services,” the EU’s competition commissioner Margrethe Vestager said in a statement when her office approved the bailout. 

The General Court's 10th Chamber agreed with the commission - the EU’s executive body - finding that efforts to fight the spread of the virus had a widespread economic impact.

“It must be noted that the Covid-19 pandemic gave rise to exceptional circumstances. The various lockdown measures adopted by the Member States, such as social distancing measures, travel restrictions, quarantine and isolation measures, resulted in the collapse of demand for air transport and impacted businesses operating in that sector in a direct and serious manner,” the ruling states.

Even as Ryanair itself received a $825 million loan from the Bank of England, the company’s outspoken owner, Michael O’Leary, railed against bailouts to rival European airlines. He has blasted national European carriers, such as Germany’s Lufthansa, as “state aid dopers.”

“Today’s judgment sets the process of liberalization in air transport back by 30 years by allowing Finland to give its national flag carrier a leg up over more efficient competitors, based purely on nationality,” Ryanair said in an emailed statement Wednesday. 

The company has said it will appeal the decision to the EU’s highest court, the European Court of Justice. 

Ryanair has so far brought legal challenges against 16 airline bailout packages, arguing they constitute illegal state aid. Normally, EU regulations prevent governments from supporting private companies on the grounds that it creates market distortions across the bloc. 

The General Court sided with Ryanair in May 2021 over Portuguese and Dutch government support for TAP and KLM. The court found that the EU failed to properly scrutinize a combined $5.7 billion bailout package. The decision did not require the airlines to pay back the cash, but instead gave the commission two months to issue a new approval of the packages. 

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