March 29. 2024. 3:21

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EU court rules in favour of Ryanair in Italian state aid challenge


Europe’s second-highest court backed on Wednesday (24 May) budget carrier Ryanair’s challenge against Italian state aid, approved by the European Union, for airlines hit by the COVID-19 pandemic, siding again with the Irish airline.

Under EU state aid rules, any decision to provide subsidies must be flagged to the European Commission to assess its legality.

“The Commission failed to provide a statement of reasons for its finding that the measure at issue was not contrary to EU law provisions other than those governing state aid,” the Luxembourg-based General Court said on Wednesday.

Two weeks ago, the court ruled in Ryanair’s favour in cases involving pandemic state aid measures for competitors Lufthansa and SAS.

Ryanair has mounted an aggressive legal campaign against subsidies granted to airlines during the COVID crisis, which brought travel to a virtual standstill, arguing that the Commission’s approval of this aid undermines EU rules on the liberalisation of air travel.

“The Commission’s clearance of almost €40 billion of public bailouts to legacy airlines during COVID has eroded public trust in the EU single market,” a Ryanair spokesperson told EURACTIV.

In October 2020, at the height of the pandemic, Italy notified the European Commission of a €130 million state aid to certain airlines holding an Italian licence.

“According to settled case-law, a decision not to initiate the formal investigation procedure in respect of notified aid must set out the reasons for which the Commission takes the view that it is not faced with serious difficulties in assessing the compatibility of the aid at issue with the internal market,” the court said in a statement.

“The General Court finds that that has not been done here.”

The Commission now has the option to appeal against the decision at the EU’s highest court, the European Court of Justice.

‘Several errors’

While Ryanair’s legal challenges against subsidies have not always been successful, the budget airline was buoyed by a significant legal victory earlier this month.

On 10 May, the General Court ruled that the German government’s €6 billion recapitalisation of its national flag carrier, Lufthansa, should not have been approved by the European Commission.

The court said that the Commission had “committed several errors” when assessing the aid, including failing to consider the airlines’ ability to raise funds on the private market.

Other airlines, such as low-cost British carrier easyJet, sold aircraft which were then leased back to the company as a means to raise cash in the short term.

The Commission also failed to include a mechanism that would compel the German airline to buy back the shareholding as quickly as possible, according to the Court.

In a statement, Lufthansa stressed that the emergency money has already been paid back to the German state in full.

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