Ryanair wins EU fight over pandemic aid for Air France-KLM

Ryanair has filed more than two dozen challenges to the vast amounts of state aid given by governments to local carriers. Picture: Brian Lawless

Ryanair has won its court challenges arguing rival airline Air-France KLM received allegedly unfair financial assistance during the pandemic.

The EU General Court’s ruling annulled the eurozone’s approvals for the financial support worth €7bn, saying regulators failed to vet the potential impact of the French government’s aid package, not just on local unit Air France but also on Dutch arm KLM.

The European Commission had given the nod to the French aid and a separate €4bn recapitalisation during 2020 and 2021, aimed at giving Air France-KLM some breathing room as it confronted one of the worst crises to hit the airline industry.

Following the outcome of the ruling, Ryanair has called on the European Commission to order France to immediately recover this multi-billion euro illegal state aid package from Air France-KLM.

The airline called the European body’s approach to state aid “spineless” in a scathing statement after the judgements were released.

Ryanair has filed more than two dozen challenges to the vast amounts of state aid given by governments to local carriers, arguing the measures should not have been waved through by the EU’s executive because they distorted competition in the industry.

Air France-KLM said it would “carefully study” the judgments and would consider whether to lodge an appeal. It said it had by now “fulfilled all exit requirements of all state aid”, The commission in Brussels said it would also reflect on the possible next steps.

In April, the group announced it had fully repaid the €300m in remaining state aid in form of hybrid perpetual bonds. The move was similar to a repayment of state aid by German rival Deutsche Lufthansa to the government, freeing the companies of conditions that included abstaining from acquisitions.

Air France-KLM has since said it plans to buy Scandinavian carrier SAS AB, and the airline group has expressed interest in Portugal’s TAP, as consolidation in the European aviation industry gathers pace.

A lower EU court in May toppled the EU’s approval of a €6bn German recapitalisation for Lufthansa, which the airline is challenging.

"Today’s judgments confirm that the commission must act as a guardian of the level playing field in air transport and cannot sign off discriminatory state aid issued by national governments. The court’s intervention is a triumph for fair competition and consumers across the EU," said a Ryanair spokesperson.

Meanwhile, Ryanair chief executive  Michael O’Leary is poised to secure a €100m bonus if the low-cost airline’s shares keep rising, the Financial Times reported.

According to a 2019 bonus plan, Mr O’Leary, 62, stands to earn share options valued at about €100m if the company’s shares maintain a price of €21 for 28 consecutive days, the newspaper said. 

The payout would come in the form of options to purchase 10 million shares at €11.12 each.

Ryanair said in November full-year profit would be in a range of €1.85bn to €2.05bn.

The airline has cautioned a significantly higher fuel bill and delays with deliveries of Boeing Co aircraft are having adverse effects. The extra fuel costs means Ryanair is “unlikely” to replicate the performance of last year’s fiscal third quarter, the company said, while visibility into the traditionally weak fourth quarter remains “very limited". 

The company continues to expand, though, as it benefits from post-covid pent-up demand. In September, it announced 30 new jobs would be created at Cork Airport as part of an overall €279m investment by the airline.

• Bloomberg with additional reporting by the Irish Examiner