This Wednesday, the General Court of the European Union annulled Brussels’ authorization of French public aid to Air France and the parent company Air France-KLM during the pandemic, when they had to stop their activity due to travel restrictions. The judicial body believes that it was an “error” to only assess its impact on Air France and not on its Dutch arm KLM or the parent company, which would benefit at least “indirectly” from the advantage granted with the aid.
The decision estimates the resources of the airlines Ryanair and Air Malta, which pointed out that the aid was “contrary to Union law.” The consequences of the ruling are uncertain: the aid that allowed Air France-KLM to overcome the pandemic has already been repaid with interest, with the last payment in April. The companies have assured that they will carefully examine the implication of the annulment and whether they will file an appeal before the Court of Justice of the European Union (CJEU), the highest level.
The European High Court considers that Brussels made a mistake when defining the beneficiaries of the aid granted. Specifically, in April 2020 France notified a 90% state guarantee on a loan of 4 billion euros to Air France, which also benefited in this framework from a shareholder loan of up to 3 billion euros. In their assessment, community services considered Air France as the sole beneficiary, excluding other entities of the Air France-KLM group.
The other case reviewed has to do with the 4 billion euro recapitalization plan for Air France and the Air France-KLM holding company, which was notified by Paris to Brussels in March 2021. On that occasion, community services also ignored the possibility that KLM was the beneficiary of support considered solely beneficial to Air France and the Air France-KLM holding company.
The ruling indicates that the Commission must examine “with special attention” the links between companies that form the same group when the evaluation affects an “accumulation” of subsidies to companies in the same group.
Ryanair, Europe’s largest low cost airline, filed more than two dozen challenges to the aid across Europe, arguing that the EU executive should not have approved it because it distorted competition in the industry.
The decision is reminiscent of what happened in May, when the General Court already annulled the decisions that gave the green light to state support for the German Lufthansa and the Danish and Swedish plan to recapitalize SAS.
