A twist of theater, with still uncertain consequences: European justice annulled this Wednesday the decisions approving France’s massive aid to Air France and Air France-KLM during the health crisis, considering that the European Commission had made an “error in the definition of beneficiaries.
Seized by the airlines Ryanair and Malta Air who considered the aid measures “contrary to Union law”, the Court of First Instance of the European Union “allows these appeals”, he announced in a press release.
The concrete consequences of these judgments are uncertain. State aid, billions of euros which enabled Air France-KLM and its companies to overcome the health crisis which brought global air transport to a halt in 2020, has since been repaid, with interest.
An appeal to the Court of Justice of the European Union?
“Air France-KLM and Air France take note of the two judgments”, indicated the airline group in a reaction sent to AFP, specifying that the two companies “will examine them carefully (…) to assess the implications”.
“Air France-KLM and Air France will study the advisability of filing an appeal for annulment before the Court of Justice of the European Union. At the same time, Air France-KLM and Air France will contribute to any exchange between the French State and the European Commission with a view to the adoption of possible new approval decisions,” according to the same source.
In addition, “Air France-KLM recalls that Air France-KLM and Air France respected and applied on April 19, 2023 all the conditions for exiting state aid granted under the European Union’s temporary framework relating to Covid -19″.
Distorted competition for Ryanair
This Wednesday’s decision echoes that of May 10, 2023, when the same court canceled two vast airline recapitalization plans, that of Lufthansa by Germany and SAS by Denmark and Sweden.
The authority, in these cases, had already been seized in particular by Ryanair. This Irish low cost, a great critic of state aid, “welcomed” the decision on Wednesday, “a triumph for fair competition and consumers throughout the EU” according to her.
“Ryanair now calls on the European Commission to order France to immediately recover this illegal multi-billion euro state aid from Air France-KLM and to impose adequate corrective measures to at least partially repair the damage caused to competition by this massive state aid,” the company said in a press release.
Misattribution
The court recalled the facts: “in April 2020, France notified the European Commission of an individual aid measure in favor of Air France, planning to first grant it a State guarantee of up to 90% on a loan amounting to 4 billion euros granted by a consortium of banks and secondly a shareholder loan amounting to up to 3 billion euros.” “According to the Commission, only Air France was the beneficiary of this aid, to the exclusion of all other companies in the Air France-KLM group,” the court underlined in its press release.
Subsequently, “in March 2021, France (…) notified the Commission of individual aid in the form of a recapitalization of Air France and the Air France-KLM holding company, for a total amount of 4 billion euros,” the court further indicated. Here too, “according to the Commission, only Air France and the Air France-KLM holding company were beneficiaries of this aid, to the exclusion in particular of (the Dutch company) KLM, a company forming part of the Air France-KLM group”.
For Ryanair and Malta Air, “the Commission erroneously defined the beneficiaries of this aid, by deciding that neither the Air France-KLM holding company”, in one of the decisions, “nor KLM (in the two contested decisions) were beneficiaries. “The Court grants these appeals and annuls the decisions of the Commission. He considers that the latter made an error in the definition of the beneficiaries of the State aid granted” and concludes “that the Air France-KLM holding company (in the first case) and KLM (in the second case) were likely to benefit, at least indirectly, of the advantage granted by the State aid in question.