The EU’s General Court has annulled a decision by the European Commission to allow France to grant financial aid to Air France and the Air France-KLM group.

The decision had been challenged by Ryanair.

France had notified the commission of two separate aid packages – in April 2020 and March 2021 – aimed at helping the airline to deal with the effects of COVID-19 restrictions.

The measures, worth billions of euro, included shareholder loans, loan guarantees, and a planned increase in share capital.

Commission ‘erred’

The commission had decided that the 2020 measures had benefited only Air France, and neither KLM nor the wider Air France-KLM group. It found, also, that the 2021 package had benefited only Air France and Air France-KLM, and not KLM.

In its judgment today (20 December) the EU court said that the commission had erred in defining the beneficiaries of the relevant state aid.

The judges referred to the “capital, organic, functional, and economic links between the companies in the Air France-KLM group, and the contractual framework on the basis of which the measures at issue were granted, as well as the type of aid measure granted and the context in which they were granted”.

They concluded that Air France-KLM and KLM were capable of benefiting, at least indirectly, from the advantage granted by the state aid.

Ryanair calls for action

Ryanair welcomed the ruling, but also called on the commission to order France to “immediately recover” the aid package from Air France-KLM and “impose adequate remedies to repair at least some of the damage to competition done by this massive state bail-out”.

A spokesperson for the airline added that the commission had not yet acted to recover aid packages that had been ruled unlawful in other EU member states.