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Ryanair again wins court challenge against KLM's Dutch bailout

Published 02/07/2024, 03:52 AM
Updated 02/07/2024, 06:32 AM
© Reuters. FILE PHOTO: A Ryanair aircraft lands at Ciampino Airport in Rome, Italy December 24, 2016. REUTERS/Tony Gentile/File Photo

By Foo Yun Chee and Bart H. Meijer

BRUSSELS/AMSTERDAM (Reuters) -Ryanair on Wednesday won its second challenge against a 3.4-billion-euro ($3.7 billion) Dutch bailout for Air France-KLM's Dutch unit after an EU court ruled competition regulators had not taken into account all beneficiaries within the airline group.

Ryanair in 2021 won the same court's backing against the Dutch state aid, one of a score of challenges it launched after EU governments pumped billions of euros into the pandemic-hit airline industry.

The European Commission subsequently re-examined the case and again cleared it, saying that the state aid was necessary and proportionate. That prompted Ryanair to take its grievance back to the Luxembourg-based General Court, the EU's second highest.

Judges annulled the Commission's revised 2021 decision approving the state aid on Wednesday.

"The Commission erred in defining the beneficiaries of the state aid granted, by excluding from those beneficiaries the Air France-KLM holding and Air France, two companies forming part of the Air France-KLM group," judges said.

The Court said it had examined the capital, organic, functional and economic links between the companies in the Air France-KLM group, the contractual framework on the basis of which the measure at issue was granted, the type of aid measure and the context in which it was granted.

Judges said that on that basis, "the Air France-KLM holding and Air France were capable of benefiting, at least indirectly, from the advantage granted by the state aid in question".

KLM said it took note of the court ruling.

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"KLM will study the verdict and will investigate further steps. KLM repaid the loans relating to the state aid in June, 2022. The credit facility was ended in April, 2023," the Dutch carrier said in a statement.

Ryanair welcomed the judgment and urged the EU competition watchdog to claw back what it said was more than 40 billion euros in discriminatory state subsidies to flag carriers.

"Today's judgment underlines the need for the European Commission to immediately act to recover these illegal state aid packages and order remedies to restore at least some of the damage done to competition," a Ryanair spokesperson said.

The EU executive said it would study the ruling and reflect on possible next steps.

The case is T-146/22 | Ryanair v Commission (KLM II; COVID-19).

($1 = 0.9293 euros)

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