On Wednesday 20 December, the General Court of the European Union annulled the European Commission’s decisions approving State aid granted by France to Air France and Air France-KLM during the Covid-19 pandemic, ruling that the Commission had committed an “error in defining the beneficiaries” (cases T-216/21 and T-494/21).
The General Court “upheld” the actions brought by the airlines Ryanair and Malta Air, which considered the aid measures to be contrary to EU law.
State aid enabled Air France-KLM and its airlines to weather the pandemic which brought global air transport to a standstill in 2020. They have since been repaid, with interest.
Air France-KLM and Air France have taken note of the two judgments, stating that they “will examine them carefully to assess their implications”. They are entitled to bring an action for annulment before the Court of Justice of the EU.
The decision echoes that of 10 May 2023, when the General Court annulled two vast airline recapitalisation plans, that of Lufthansa by Germany and that of SAS by Denmark and Sweden (see EUROPE 13179/18).
Ryanair welcomed the decision as “a triumph for fair competition and consumers across the EU”. The Irish low-cost airline is asking the Commission to “order France to immediately recover this illegal state aid of several billion euros from Air France-KLM and to impose adequate remedies to repair at least part of the damage caused to competition by this massive state aid”.
In April 2020, France notified the Commission of an individual aid measure in favour of Air France: a 90% state guarantee on a loan of €4 billion granted by a consortium of banks and a shareholder loan of up to €3 billion (see EUROPE 12479/5). In April 2021, France notified individual aid of €4 billion to recapitalise Air France and Air France-KLM (see EUROPE 12692/11).
For Ryanair and Malta Air, “the Commission wrongly defined the beneficiaries of this aid, deciding that neither the holding company Air France-KLM”, in one of the decisions, “nor KLM (in the two contested decisions) were beneficiaries”.
The General Court upheld these appeals and annulled the Commission's decisions. It considered that the latter had erred in defining the beneficiaries of the State aid granted and concluded that the holding company Air France-KLM (in the first case) and KLM (in the second) were “likely to benefit, at least indirectly, from the advantage granted by the State aid in question”.
The General Court examined the capital, organic, functional and economic links between the companies in the Air France-KLM group, as well as the contractual framework and the type of aid granted. (Original version in French by Lionel Changeur)