EU court backs Ryanair challenge to KLM, TAP state aid

General Court judges annulled the EU executive's clearance of state aid for Portuguese carrier TAP, citing "an inadequate statement of reasons" by the European Commission. [EPA-EFE/MARIO CRUZ]

Europe’s second-highest court upheld on Wednesday (19 May) Ryanair’s fight against billions of euros in state aid granted to its rivals KLM and Transportes Aereos Portugueses (TAP) – rare legal victories for the Irish budget carrier in its battle against airline bailouts.

“The General Court annuls the (European) Commission’s decision to approve the Netherlands financial aid for the airline KLM amid the COVID-19 pandemic on the grounds of inadequate reasoning,” the Luxembourg-based court said.

Judges also annulled the EU executive’s clearance of state aid for Portuguese carrier TAP citing “an inadequate statement of reasons” by the Commission.

The EU competition enforcer last year cleared a 3.4 billion euro bailout for KLM and a 1.2 billion euro rescue loan for TAP.

The court said the annulments and recovery of the state aid would be suspended pending new decisions by the Commission.

Ryanair welcomed the ruling, repeating their opposition to EU countries bailing out national flag carriers “in the name of faded national prestige”.

“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 liberalisation in air transport by rewarding inefficiency and encouraging unfair competition,” said a Ryanair spokesperson in a statement.

KLM, the Dutch arm of Air France, said that for the moment the decision by the Luxembourg-based General Court has “no consequences” for the company as the state aid will not have to be repaid until the European Commission’s competition authority has a chance to look at its decision.

Governments around the world have pumped billions of euros into the airline industry hit by virus-related restrictions and lockdowns.

Europe’s biggest budget airline has filed 16 lawsuits against the Commission for allowing state aid to individual airlines such as Lufthansa, KLM, Austrian Airlines and TAP, as well as national schemes that mainly benefit flag carriers.

Previous cases brought by Ryanair against the provision of state aid to airlines had failed, with the EU’s Lower Court deeming the measures appropriate to remedy the damage caused by the COVID-19 pandemic.

Ryanair vows to appeal EU court loss in airline bailouts case

Ryanair lost on Wednesday (17 February) two EU court challenges to massive public bailouts of rival companies such as Air France and SAS designed to help them get through the coronavirus pandemic – an outcome the company immediately said it would appeal.

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