The government of Malta and charter airline Ryanair had initiated procedures against the support from the COVID recovery fund, arguing that it constituted unfair competition.
The case centered on the legitimacy of the financial aid that the European Commission had granted to Air France-KLM. The General Court ruled that the Commission, in its approval decision, violated agreed terms, resulting in part of the aid unjustly going to KLM.
The aid, which included a substantial loan guarantee and a shareholder loan, was initially approved separately by the European Commission first for Air France and then for Air France-KLM, excluding other business units. However, the Court determined that the aid benefited not only Air France but also Air France-KLM and its Dutch subsidiary KLM.
Ryanair welcomed the ruling, seeing it as a victory in their fight against the approval of the COVID bailout for Air France-KLM. Both the Irish airline and Malta had claimed that the aid measures distorted competition. This judgment may have far-reaching consequences for the aviation sector and the manner in which financial aid is granted and distributed during crises within the European Union.
The European Commission must now reconsider how it provides support to airlines during emergencies. Air France-KLM has repaid the aid and is currently assessing the implications, with a possible appeal to the Court of Justice of the European Union under consideration.
The General Court, informally known as the General Court of the European Union, is a constituent court of the Court of Justice of the European Union. It handles procedures and complaints brought by individuals and EU member states against the European Union, although certain cases remain reserved for the European Court of Justice.