Judges of the European Union’s General Court have annulled a decision approving French state aid to Air France, after ruling that other companies of its parent group should have been considered as beneficiaries.
The case – brought by Ryanair and Malta Air against the European Commission – contested the approval of the aid granted during the Covid-19 pandemic.
This aid comprised a state loan guarantee, covering 90% of a €4 billion bank loan, and a shareholder loan of up to €3 billion for Air France in 2020.
The Commission had approved the aid on the basis that Air France was the sole beneficiary, to the exclusion of all other companies in Air France-KLM Group.
France’s government subsequently notified the Commission, a year later, about a €4 billion recapitalisation of Air France and Air France-KLM.
Air France and Air France-KLM were considered by the Commission to be the only beneficiaries of the aid, with KLM being excluded.
But the Ryanair case argued that the Commission, in approving the aid, incorrectly defined the beneficiaries by indicating that neither Air France-KLM, in one instance, nor KLM, in both, stood to benefit.
“Where there are grounds to fear the effects on competition of an accumulation of state aid within the same group, the onus is on the Commission to exercise particular vigilance in examining the links between the companies belonging to that group,” says the court.
It examined various links between Air France-KLM Group’s companies, and the framework of the support measures, and found that both Air France-KLM and KLM were capable of benefiting – at least indirectly – from advantages arising from the granting of state aid.
