Ryanair wins EU fight over pandemic aid for Air France-KLM

Ryanair Holdings Plc won European Union court challenges against billions of euros of state aid for rival Air France-KLM, in the latest round of the Irish carrier’s campaign against allegedly unfair subsidies doled out during the Covid-19 pandemic.

The EU’s General Court on Wednesday annulled the bloc’s formal approvals for the aid, saying regulators failed to vet the potential impact of the French government’s aid package not just on local unit Air France but also on Dutch arm KLM.

The European Commission had given the nod to €7 billion ($7.7 billion) in French aid and a separate €4 billion recapitalization during 2020 and 2021, aimed at giving Air France-KLM some breathing room as it confronted one of the worst crises to hit the airline industry. 

Ryanair — Europe’s biggest discount airline — has filed more than two dozen challenges to the vast amounts of state aid given by governments to local carriers, arguing the measures shouldn’t have been waved through by the EU’s executive because they distorted competition in the industry.

The company called the commission’s state-aid approach since the pandemic “spineless,” saying it allowed EU nations “to write open-ended checks to their inefficient zombie flag carriers in the name of faded national prestige.”

Air France-KLM said it will “carefully study” the judgments and would consider whether to lodge an appeal. It said it’s by now “fulfilled all exit requirements of all state aid.”

The commission in Brussels said it would also reflect on the possible next steps.

In April, the group announced it had fully repaid the €300 million in remaining state aid in form of hybrid perpetual bonds. The move was similar to a repayment of state aid by German rival Deutsche Lufthansa AG to the government, freeing the companies of conditions that included abstaining from acquisitions.

Air France-KLM has since said that it plans to buy Scandinavian carrier SAS AB, and the airline group has expressed interest in Portugal’s TAP, as consolidation in the European aviation industry gathers pace.

A lower EU court in May toppled the EU’s approval of a €6 billion German recapitalization for Lufthansa, which the airline is challenging. 

The cases are: T-216/21, T-494/21, Ryanair and Malta Air v. Commission.