Ryanair loses first court fight over Covid-19 airline aid

Ryanair Holdings Plc lost the first round of its campaign to topple Covid-19 bailouts for rival airlines when a European Union court ruled that French and Swedish subsidies didn’t break state-aid rules.

The EU’s General Court in Luxembourg said on Wednesday that the French and Swedish state support was appropriate for tackling serious disturbances to the countries’ economies caused by the pandemic.

Ryanair vowed to appeal the rulings at the EU’s top court, arguing that the French and Swedish programs mainly benefited Air France-KLM and SAS AB and unfairly discriminated against other European carriers.

Ultimate victory would “give airlines and consumers a glimmer of hope that national politicians obsessed with their flag carriers will be sent back to the drawing board and required to use state aid wisely to assist the recovery of traffic in the post-Covid world instead of bailing out their favored airline at the expense of fair competition and consumers,” Ryanair said.

Ryanair is challenging more than a dozen state bailouts for airlines across Europe over concerns the cash boost for rivals will allow them to emerge stronger, slash fares and swallow up others. The Irish company fears burning its own cash reserves while others get government rescues.

The carrier’s legal filings claim the EU’s competition regulator isn’t living up to its task of ensuring governments don’t unfairly help a favored company at the expense of others. The EU court can cancel such approvals. The European Commission has been under pressure to approve unprecedented state aid to save the pandemic-struck European economy.

Judges in Wednesday’s ruling backed EU approval for a French program delaying aviation tax payments for companies with a national license and Swedish loan guarantees for locally based airlines.

The cases are: T-238/20 and T-259/20, Ryanair v Commission