EU ordered to justify bailouts in court loss to Ryanair

BRUSSELS, Belgium — An EU court on Wednesday said the European Commission failed to make its case when approving the bailouts of KLM and Portugal’s TAP, handing a rare victory to low cost carrier Ryanair.اضافة اعلان

The bloc’s Luxembourg-based General Court ordered the EU regulator to redo its paperwork, and offer clearer arguments on why the bailouts conform with competition law.

The court “annuls the commission’s decision to approve the Netherlands financial aid for the airline KLM amid the COVID-19 pandemic on the grounds of inadequate reasoning,” a statement said.

“However, the effects of the annulment (including recovery of the aid) are suspended pending a new decision” by the EU, it added, meaning the airlines are not on the hook to pay back the subsidies for now.

The TAP decision involved a low cost loan from the Portuguese government of 1.2 billion euros, while KLM received a loan and state guarantees worth 3.4 billion euros, the court said.

Separately, Ryanair lost a challenge to a 10 billion-euro rescue fund in Spain for local carriers.

The cases were part of a legal onslaught across Europe by the Irish low-cost carrier to stop bailout deals for the bloc’s legacy airlines.

Ryanair has long railed against the support given to national champions, and is often backed by the European Commission which requests that companies make concessions — such as giving up valuable flight slots in busy airports — in return for state aid. 

But state aid rules have been considerably weakened to fight the pandemic and Ryanair had until Wednesday lost all its cases at EU courts.

“Today’s rulings in 2 of more than 20 appeals filed to date before the General Court are an important victory for consumers and competition,” a company spokesperson said.

Ryanair — Europe’s biggest airline in terms of passenger numbers — is also seeking to undo Germany’s massive bailout of Lufthansa in the EU courts.

Ryanair last month estimated the total state aid to airlines approved by Brussels since the beginning of the pandemic at more than 30 billion euros, including 11 billion to Lufthansa, 10.6 billion to Air France-KLM, 3.5 billion to Alitalia, and 1.3 billion to SAS.

Based in Ireland but hugely popular in the UK, Ryanair was able to get a 690-million-euro emergency loan from British public authorities in May last year.

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