Ryanair sues over Air France aid in fight to halt virus bailouts

Ryanair Holdings Plc challenged French government help for Air France-KLM, in its latest legal attack on allegedly unfair government support for favored national carriers amid the Covid-19 crisis.

The Irish airline said Monday it filed a lawsuit at the European Union’s General Court seeking to topple the EU’s approval for a program delaying aviation tax payments for companies with a French license.

The tax break will mostly benefit Air France and excludes Ryanair and easyJet Plc, which fly many routes from French airports but are based elsewhere. Ryanair has also complained that similar Swedish and Danish programs unfairly discriminate against other European carriers.

European governments are planning to pump billions of euros into airlines after the coronavirus outbreak halted most air travel. These subsidies for Air France, Alitalia SpA and Deutsche Lufthansa AG are “going to hugely distort the level playing field for aviation” by keeping inefficient airlines alive while rivals like Ryanair risk burning through cash reserves, Ryanair Chief Executive Officer Michael O’Leary said earlier this month.

The European Commission, the EU’s executive arm, said it would defend its decision in court. A spokeswoman for Air France-KLM declined to comment. French government officials had no immediate comment.

Air France-KLM Chief Executive Officer Ben Smith said last week government aid including billions in loans and guarantees as well as payroll support and tax measures are essential to the carrier’s survival.

France will allow French airlines to defer some 200 million euros ($217 million) in aviation tax payments due from March and December this year, according to the European Commission. They won’t need to pay it until the end of 2022 and France estimates it could cost the airlines some 29.9 million euros to obtain the same funding on the market.