The Luxembourg-based General Court has annulled the support given to Amsterdam based KLM and Portugal's Transportes Aereos Portugueses - TAP saying regulators failed to justify the huge cash injections given to the national carriers at the height of the global pandemic. However, the court said the annulments - and the recovery of the money - would be suspended pending new decisions by the Commission.
The court advised "The General 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," They also rejected the EU executive's clearance of state support for TAP saying "an inadequate statement of reasons".
Previously, the EU cleared a €3.4-billion/ $4.15 billion Dutch government bailout for struggling airline KLM and a €1.2 billion rescue package for TAP
KLM said: the judgment was of no consequence as the state aid will not have to be repaid until the commission has a chance to review the decision, whilst TAP hasn't yet made a comment. Antonio Costa, Prime Minister of Portugal told the media "Given the crisis that hit the aviation sector around the world, it was unthinkable for the European Commission not to lift restrictions on state aid, - There is no reason to believe their legal experts did not study the matter well."
Ryanair has been waging legal war on its competition and the EU over what it calls illegal payments, yet it hasn't been going all the Irish airlines way recently. The court rejected the budget airline's challenge to a €10 billion Spanish fund for virus-hit companies approved by the European Commission, saying the measure complied with EU law. In April, the court backed the EU over its approval of support for SAS and Finnair, while in February judges also upheld state aid granted to rivals including Air France. Ryanair also lost a case when the court backed Lufthansa over an EU decision allowing state aid to Frankfurt's Hahn airport where Ryanair was the main beneficiary.
After the ruling Ryanair said: "The European Commission's approvals of state aid to Air France-KLM and TAP went against the fundamental principles of EU law and reversed the clock on the process of liberalisation in air transport by rewarding inefficiency and encouraging unfair competition,"
Ryanair continues to take advantage of several tax breaks, airport slot and handling subsidies, government payouts as part of furlough schemes and other financial incentives, which by another other names, some may call state aid.
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