Today, Ryanair has won its second challenge against a €3.4 billion Dutch bailout of the Air France-KLM's Dutch chapter after Europe's second top court said EU competition regulators had erred in not taking into account other beneficiaries within the airline group.
Ryanair in 2021 won the same court's backing against the Dutch state aid, one of a score of challenges it launched after EU governments pumped billions of euros into the pandemic-hit airline industry.
Today (7 February), the court found that the commission had erred in defining the beneficiaries of the aid, by excluding the Air France-KLM holding and Air France, two companies forming part of the Air France-KLM group.
In 2020, the European Commission approved Netherlands State aid to KLM consisting of a State guarantee for a bank loan and a State loan. The total budget of the aid was €3.4 billion. The objective of the measure was to provide KLM with temporary liquidity in the context of the Covid-19 pandemic.
However, in 2021, the General Court of the European Union annulled the Commission’s decision 1 on the ground of failure to state reasons as regards the determination of the beneficiary of the measure in question. In addition, it decided to suspend the effects of the annulment pending the adoption of a new decision by the Commission.
The European Commission subsequently re-examined the case and again cleared it, saying that the state aid was necessary and proportionate. That prompted Ryanair to take its grievance back to the Luxembourg-based General Court.
Judges annulled the Commission's revised 2021 decision approving the state aid today.
"The Commission erred in defining the beneficiaries of the state aid granted, by excluding from those beneficiaries the Air France-KLM holding and Air France, two companies forming part of the Air France-KLM group," judges said.
The Court said it had examined the capital, organic, functional and economic links between the companies in the Air France-KLM group, the contractual framework on the basis of which the measure at issue was granted, the type of aid measure and the context in which it was granted.
Judges said that on that basis,
"the Air France-KLM holding and Air France were capable of benefiting, at least indirectly, from the advantage granted by the state aid in question".
KLM has acknowledged the court ruling, It said,
"KLM will study the verdict and will investigate further steps. KLM repaid the loans relating to the state aid in June, 2022. The credit facility was ended in April, 2023," the Dutch carrier said in a statement.
Ryanair noted that today's decision is the fourth time overall that the Court has ruled that Covid-19 State aid to the Air France-KLM Group was unlawful.
Ryanair said it was calling on the European Commission to order the Netherlands to immediately recover this multi-billion euro state aid package from Air France-KLM and impose adequate remedies to repair at least some of the damage to competition done by this "massive State bailout".
A spokesperson for the airline said today's judgement confirms that the Commission must act as a guardian of the level playing field in air transport and cannot sign-off discriminatory State aid issued by national governments.
"The Court's intervention is a triumph for fair competition and consumers across the EU," the spokesperson said.
"The EU Commission's spineless approach to State aid since the beginning of the Covid-19 crisis allowed member states to write open-ended cheques to their inefficient zombie flag carriers in the name of faded national prestige".
"During the Covid-19 pandemic over €40 billion in discriminatory State subsidies was gifted to EU flag carriers. The EU General Court has already ruled in other cases concerning Covid-19 State aid that billions of euros in aid received by SAS, Lufthansa, Air France-KLM, and certain Italian airlines were unlawful," the spokesperson added.
On this whole scenario, the EU executive said it would study the ruling and reflect on possible next steps.
Picture Courtesy : Newcastle Flyer
