JUSTIN WASTNAGE / BRUSSELS
Irish carrier required to repay millions of euros after decision on breach of state aid laws
Irish low-cost carrier Ryanair is expecting to launch an appeal against the European Commission's judgement in the Brussels South Charleroi airport investigation.
In a ruling to be released this week, the Commission is expected to find the airport's owner, Belgium's Wallonia region, guilty of breaking state aid rules in its efforts to attract Ryanair, which established a base at Charleroi in February 2001. Ryanair is expected to be ordered to repay "tens of millions of euros" in subsidised landing and handling fees, says the airline's director of policy, Jim Callaghan.
The airline's woes were compounded last week when its shares lost one-third of their value on publication of the carrier's first profit warning. It may also defer some of the 100 Boeing 737-800s due over the next eight years as it ramps back growth plans.
The airline has forecast a 10% drop in full-year profits to €215 million ($273 million), compared with €239 million last year and its share price fell by more than 30% to €4.70 in one day last Wednesday.
Speaking to Flight International in Brussels ahead of this week's Charleroi ruling, Callaghan said he expected the deal to be found illegal in four areas. Handling fees, estimated to be €1 per passenger, and discounted landing fees are both deemed to have been delivered below cost. Equally, the EC finds start-up assistance given to the airline and subsequent marketing support to breach European Union competition rules.
Callaghan says the airline will formally issue an appeal within two months. The EC is expected to launch new guidelines for government-owned airports' use of public funds in attracting airlines in parallel to announcing the Ryanair decision (Flight International, 13-19 January). Callaghan says this proves the EC ruling is based on flawed regulation. "How can the EC say that parts need to be repaid while admitting that no guidelines currently exist?" he says.
Ryanair says it will review its operations at Charleroi and could be forced to pull out of this and other publicly owned airports. The Walloon government says it may push ahead with a privatisation effort of Charleroi ahead of the 2005 plan, as the rules do not apply to private airports.
Source: Flight International
