A Ryanair Boeing 737-800 aeroplane takes off from the airport in Palma de Mallorca, Spain. Picture: REUTERS/PAUL HANNA
A Ryanair Boeing 737-800 aeroplane takes off from the airport in Palma de Mallorca, Spain. Picture: REUTERS/PAUL HANNA

Brussels — Ryanair Holdings notched up the first wins in its campaign to topple billions of euros of Covid-19 bailouts for rival carriers after EU judges faulted EU regulators for failing to properly check whether aid was justified.

On Wednesday, the EU general court, the bloc’s second-highest tribunal, overturned the European Commission’s approval of a €3.4bn Dutch subsidy to Air France-KLM and €1.2bn offered by Portugal to TAP Air Portugal.

But rather than order the repayment of subsidies, judges gave regulators the chance to re-examine the cases and fix any procedural flaws. On Wednesday, Ryanair lost a separate challenge to a €10bn Spanish fund for local carriers.

Ryanair has filed more than two dozen challenges to EU approvals for pandemic aid doled out by governments to carriers, including Deutsche Lufthansa and Air France-KLM. The Irish low-cost carrier, which has lost five of the challenges so far, argued that the aid for selected airlines creates an unfair advantage and will help rivals emerge stronger, slash fares and swallow up others.

‘Important victory’

Ryanair said in a statement that the two rulings in its favour were “an important victory for consumers and competition”, calling the EU’s aid approvals “discriminatory”, risking distortion to markets “for decades to come”.

Ryanair claims the EU’s competition regulator isn’t living up to its task of preventing governments from unfairly helping favoured companies at the expense of others. The commission has been under pressure to approve unprecedented state aid to save the pandemic-struck European economy.

KLM said in a statement that the court decision “does not have any consequences for KLM and the aid it has received at this moment”.

Daniel Ferrie, a spokesperson for the commission, said it would reflect on the rulings and consider its next steps.

No ‘substantive error’

“The illegality that has been found is a failure to state reasons and not a substantive error,” the court ruled in the case concerning TAP. On KLM, the court also said the EU decision was annulled because of its reasoning.

EU judges said the court wouldn’t order any aid repayment pending a new decision from the commission, due to the potential further harm to economies amid the pandemic.

The court said “the immediate calling into question of the receipt of the sums of money envisaged by the aid measure at issue would have particularly damaging consequences” for the Netherlands.

Likewise, the court also pointed to the “harmful effects of the disruption caused by the Covid-19 pandemic on Portugal’s air services and its economy and of TAP Air Portugal’s importance for those services and the economy of that member state”.

A TAP spokesperson wasn’t immediately available to comment.

The Dutch finance ministry said the ruling will have “no direct consequences for the support for KLM”. Portugal’s Prime Minister António Costa also said the decision won’t have “any consequences”.

It’s “merely a preliminary decision” that aims to get more information from the commission, Costa said in comments to reporters broadcast by the RTP television channel.

Given the crisis in the aviation sector, “it would be totally unthinkable for the EU commission not to have lifted the limits on state aid that practically all EU airlines have resorted to”. Costa said.

Bloomberg News. More stories like this are available at Bloomberg.com

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