- Wednesday, October 16, 2024
The European Union's second-highest court has reversed a decision that allowed KLM Royal Dutch Airlines to receive state aid during the pandemic. Low-cost carrier Ryanair brought the case forward, arguing that Air France and Air France-KLM also benefited from the Dutch support. The General Court of the European Union has determined that the European Commission made an error by excluding Air France and Air France-KLM from the list of potential aid recipients. Shares of Air France-KLM dropped over 4% following the ruling.
Indirect Benefits for Air France-KLM
According to the court, the Air France-KLM holding and Air France themselves may have indirectly benefitted from the state aid in question. This decision highlights the need for transparency and fairness when it comes to supporting struggling airlines during such challenging times.
Government Aid for Airlines
Governments worldwide were forced to step in and rescue airlines as travel restrictions and border closures severely impacted international traffic. Many carriers received substantial financial assistance through state-backed loans. In the case of KLM, the European Commission approved Dutch state aid totaling 3.4 billion euros ($3.66 billion) in 2020. However, KLM has announced that it is currently in the process of repaying its final loans received from the Dutch government and banks. The airline reports borrowing only EUR942 million from the credit facility of EUR3.4 billion.
In conclusion, the recent ruling by the General Court emphasizes the importance of fair distribution of state aid to ensure equal opportunities for all airlines facing financial hardship. Another Victory for Ryanair Against State Subsidies
The recent ruling by the General Court against state subsidies provided to European flag carriers has been hailed as a significant triumph for Ryanair. The Dutch government, KLM, and Air France-KLM have not offered any comments on the ruling.
Oswell & Vahida, the law firm representing the airline, stated that this decision is yet another historic win for Ryanair in its fight against state subsidies. It is worth noting that last year, a similar decision by the commission approving Germany's recapitalization of Deutsche Lufthansa was overturned by the General Court. However, Lufthansa had already repaid the state at that time.
Ryanair's spokesperson has emphasized that this court intervention is a victory for fair competition and benefits consumers across the EU. The airline urges the bloc to take action to address the harm caused by Dutch state aid.
In a scathing critique, the spokesperson accused the EU Commission of a spineless approach to state aid during the Covid-19 crisis. They believe that member states were allowed to provide unlimited support to their inefficient zombie flag carriers, all under the guise of national pride.
The commission's spokesperson has acknowledged the ruling and stated that they will carefully study it to determine their next course of action. It is important to note that the decision from the General Court can still be appealed to the European Court of Justice.
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