Ryanair to appeal court ruling

RYANAIR will appeal yesterday’s decision by the French Court of Appeal in Nancy that upheld a ruling that the airline was in receipt of State aid supporting its London-Strasbourg route.

The court said subsidies paid to Ryanair by Strasbourg Chamber of Commerce represented an improper use of public funds. The ruling came in respect of an action taken by BritAir, a regional airline owned by Air France that claimed it was forced to suspend its operations between London and Strasbourg as a result of Ryanair’s aggressive pricing. BritAir said the chamber payments allowed Ryanair to cut prices and distorted competition.

Ryanair chief executive Michael O’Leary said the decision prevented the return of low-cost travel to Strasbourg. Earlier this week, the airline pledged to resume flights to the city if the court ruling went in its favour. Ryanair responded to the original court finding by switching its Strasbourg operations to the nearby city of Baden.

Mr O’Leary said the airline would go all the way to the European Court in Luxembourg to overturn the decision if necessary. The market reacted unfavourably to the decision at first. Ryanair shares fell 25c to 6.35 early yesterday but later recovered to 6.55.

Merrion Capital analyst John Mattimoe said the decision was unwelcome for shareholders, but that it was much less important than the forthcoming decision in respect of Ryanair’s operations at Charleroi in Belgium.

Ryanair expressed surprise at yesterday’s decision and said it contradicted the findings of the court-appointed investigator.

The investigator had found that the case should be thrown out and that the agreements between Ryanair, Strasbourg airport and the chamber did not constitute State aid.