An EU court has annulled, for a second time, a European Commission decision to approve State aid granted by the Dutch government to the KLM airline at the start of the COVID-19 pandemic in 2020.

The €3.4 billion package consisted of a State loan and a State guarantee for a bank loan.

In the first case taken by Ryanair, the General Court had annulled the commission’s initial approval, citing concerns about which subsidiaries would benefit, but had suspended the annulment to allow the commission to revise its decision.

In 2021, the commission again found that the proposed State aid was compatible with the internal market, and that KLM and its subsidiaries were the sole beneficiaries of the aid, to the exclusion of the other companies in the wider Air France-KLM group.

Commission ‘erred’

Today (7 February), the court found that the commission had erred in defining the beneficiaries of the aid, by excluding the Air France-KLM holding and Air France, two companies forming part of the Air France-KLM group.

It said that it had examined the “capital, organic, functional, and economic links” between the companies in the Air France-KLM group, as well as the contractual framework linked to the measure.

“It concludes, on that basis, that 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.”