The European Union court has invalidated the authorization for France’s pandemic assistance to Air France and Air France-KLM.
BRUSSELS (AP) — Low-cost airlines Ryanair and Malta Air won a court case Wednesday against the European Union’s decision to approve billions of euros in state aid by the French government to Air France and holding company Air France-KLM during the COVID-19 pandemic.
Ryanair has taken legal action against policies implemented by EU nations that aim to assist certain airlines during the impact of COVID-19 restrictions.
The European Commission, the executive branch of the EU, must approve any financial assistance given to companies by the bloc’s 27 members. Several countries in Europe utilized this measure to support their airlines during the pandemic.
In 2020, the French government informed the European Commission about providing a financial assistance of 7 billion euros ($7.67 billion) specifically for Air France, leaving out all other companies in the Air France-KLM group. One year later, France updated the European Commission on their proposal to recapitalize Air France and its parent company with 4 billion euros ($4.38 billion).
The European Commission did not object in either situation.
However, the European General Court determined that the Air France-KLM holding and KLM could potentially gain from the benefits provided by the state aid in question, and invalidated the decisions made by the European Commission.
The court stated that if there is reason to believe that a group receiving state aid could harm competition, the Commission must be especially careful when investigating the connections between the companies in that group.
The decision can be challenged.
The European Commission serves as the EU’s regulator for preventing monopolies. In response to travel disruptions caused by the pandemic in 2020 and the resulting financial strain on airlines, the commission relaxed its regulations and authorized large amounts of financial aid for domestic airlines.
During an unprecedented crisis, a fast-track system was implemented by the commission, leading to the approval of approximately 3 trillion euros in state aid for all sectors in member nations. Ryanair estimates that 40 billion euros were allocated specifically to the European airline industry.