State aid for Air France: Ryanair won the court

It was in June 2020 that the airline was preparing to take off again after two months of almost complete shutdown due to various restrictions in Europe. While some states have started pulling out their checkbooks to help their companies, Ryanair CEO Edward Wilson told La Tribune: I think the shame of taking the plane should go to the French taxpayers who came to the aid of Air France. It’s a shame to give money to a company that uses old planes “.

“It’s a shame that I helped Air France” (Edward Wilson, CEO of Ryanair)

In the course of the company went to on a crusade against the billions of euros in aid paid by states to European airlines during Covid-19. And today, Ryanair just won over the European Commission and subsequently over Air France-KLM. The Court of Justice of the European Union (CJEU) has just ruled in favor of the Irish low-cost airline and its subsidiary Malta Air on the validity of eight billion euros of various aid granted by the French state to Air France in the beginning. health crisis. A prestigious victory for Ryanair, which could only be symbolic.

The CJEU is clear in its press release: “Court annuls Commission decision approving financial aid from France in favor of Air France and Air France-KLM”. More specifically, it believes that the two subsidies paid by Paris to Air France should not be confirmed by the European Commission as they stand, because they also benefited the Air France-KLM group and its Dutch subsidiary KLM, and not the single domestic market.

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Eight billion euros in aid canceled

In April 2020, Brussels actually confirmed a state-guaranteed loan (PGE) for Air France up to 90% of four billion euros and a direct shareholder loan of three billion euros. euros from the French state on the condition that the French company is the sole beneficiary.

Likewise, in March 2021 the Commission approved a four billion euro recapitalization of Air France and its parent company Air France-KLM – through a capital increase of one billion euro and the conversion of a shareholder loan into quasi-equity through a perpetual hybrid. bonds – France. But even here, Brussels set the condition that it would benefit the French company and holding, but not the other entities of the group, including KLM.

In both cases the Court of Justice “concludes that the Commission committed a manifest error of assessment by excluding, on the one hand, the holding company Air France-KLM and its other subsidiaries, including KLM and its subsidiaries (Air France decision), and KLM and its subsidiaries ( Air France – decision by KLM and Air France), on the other hand from the range of beneficiaries of the notified aid measures’. It therefore considers that the aid paid by France had consequential economic effects for the entire French group. She therefore posted orders on “cancel the decision of the defendant (in this case the European Commission) (…) and impose compensation for the costs of the proceedings on the defendant”.

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Ryanair claims victory…

Ryanair immediately welcomed the news through one of its spokespersons: “The Court’s intervention is a triumph for fair competition and consumers across the EU. » This one didn’t fail to add a layer “The European Commission’s lax approach to state aid since the start of the Covid-19 crisis has allowed member states to write unlimited checks to their inefficient zombie airlines in the name of faded national prestige. »

That’s how the Irish company estimates it “EU airlines have been given more than €40 billion in discriminatory public subsidies”pointing directly “Damage to competition caused by Swedish, Danish, German and Italian governments favoring their local airlines over other EU airlines in breach of European law”.

Although not directly challenged in this matter, Air France-KLM and Air France responded. They indicated that they “note today’s two judgments of the General Court of the European Union”That they “scrutinizes these judgments carefully to assess their implications” AND “is studying the advisability of filing an appeal with the Court of Justice of the European Union”.

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…but may not gain much

If it is still too early to know what the strategy of the French group and its subsidiary will be, it is possible that they will not embark on a new course of action. Indeed, this decision seems primarily symbolic, as all this support has already been repaid to the state, including interest. Ryanair request “The European Commission orders France to immediately recover this multi-billion euro illegal state aid from Air France-KLM” so it seems outdated. This a priori did not happen in similar cases that Ryanair won against the Commission, where the low-cost airline was also rejected several times.

Moreover, in a similar case from 2021 on Dutch state aid in favor of KLM, the Court of Justice ruled in favor of Ryanair by overturning the decision of the European Commission, but given “particularly harmful consequences for the economy and air services in the Netherlands” had in connection with the pandemic “decided to postpone the effects of the annulment of the contested decision until the adoption of a new decision by the Commission”.

The solution that is emerging at the moment also seems to be the adoption of a new decision by the European Commission in accordance with the observations of the Court of Justice of the European Union. Air France-KLM and France also said yes “will contribute to any exchange between the French State and the European Commission in order to adopt any new approval decisions”.

Ryanair is also asking “adequate remedial measures to at least partially remedy the damage caused to competition by this massive state support”but the CJEU gave no indication of this.