Win for Ryanair at EU Court Over Covid Bailout Packages

The budget airline prevailed at the European General Court after several other challenges to state aid for its competitors were rejected by the same court.

A Ryanair jet parks at the airport in Weeze, Germany, in 2018. (AP Photo/Martin Meissner, file)

LUXEMBOURG (CN) — The European Union didn’t properly check Portuguese and Dutch airline bailout packages, the bloc’s second-highest court ruled Wednesday.

In a complaint brought by Irish budget airline Ryanair, the European General Court found that the EU failed to properly scrutinize a combined $5.7 billion bailout package for rival airlines KLM and TAP during the Covid-19 pandemic.

“The contested decision does not set out in a sufficiently clear and precise fashion all the relevant matters of fact and law,” the court’s tenth chamber wrote in the KLM decision, using a similar justification in the TAP decision

The European Commission, the EU’s executive body, approved the financial assistance packages of 3.4 billion euro ($4.2 billion) and 1.2 billion euro ($1.5 billion) to Dutch flag carrier KLM and Portuguese flag carrier TAP last year, as part of a series of government bailouts of industries hit hard by the ongoing coronavirus outbreak. 

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. 

In a statement following the rulings, Ryanair emphasized the importance of the EU rules.

“One of the EU’s greatest achievements is the creation of a single market for air transport,” the company said. “The European Commission’s approvals of state aid to Air France-KLM and TAP went against the fundamental principles of EU law and reversed the clock on the process of liberalization in air transport by rewarding inefficiency and encouraging unfair competition.”

It wasn’t all victory for Ryanair on Wednesday, however. The General Court rejected a complaint over Spain’s bailout of companies, including local airlines, hit by the pandemic. That 10 billion euro ($12.2 billion) fund, the court noted, “contains 92 paragraphs and makes it possible to understand the factual and legal grounds on which the Commission decided not to raise objections to the aid scheme at issue.” 

Wednesday’s rulings do not mean that KLM and TAP will have to pay back the aid. The court ordered the recovery of the funds to be suspended for two months to allow for the commission to issue a new approval of the bailout packages.

KLM appeared to be unconcerned by the ruling.

“The decision of the General Court does not have any consequences for KLM and the aid it has received at this moment,” it said in a statement. “The General Court has decided that the consequences of the annulment will be suspended.”

TAP did not respond to a request for comment. 

Ryanair’s long-standing crusade against airline bailouts, despite a $825 million loan from the Bank of England, has been mostly unsuccessful before the Luxembourg-based court. It rejected similar complaints from Ryanair about Finland and Denmark’s bailouts of Scandinavian Airlines, Sweden’s support for Scandinavian Air, and France’s bailout of Air France. Europe’s largest budget airline has vowed to appeal those decisions. 

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