Ryanair wins round in challenge of rivals’ EU covid-19 bailouts

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

The EU General Court, the bloc’s second-highest tribunal, last week overturned the European Commission’s approval of a $4.2 billion Dutch subsidy to Air France-KLM and $1.5 billion offered by Portugal to TAP SGPS.

But rather than order the repayment of subsidies, judges gave regulators the chance to re-examine the cases and fix any procedural flaws. Ryanair last week lost a separate challenge to a $12.2 billion 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 to emerge stronger, slash fares and swallow up others.

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

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

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

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

“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.