EU Court disapproves of corona support for Air France-KLM

The European Court has reversed the European Commission's approval decision in which Air France-KLM received billions in European aid during the corona period. According to the court, part of that money ended up with KLM - against the agreements.

The government of Malta and charter airline Ryanair had initiated proceedings against the support from the Covid recovery fund, alleging distortion of competition.

The case revolved around the legitimacy of the financial aid that the European Commission had granted to Air France-KLM. The European Court ruled that the Commission had infringed agreements made in its approval decision, as a result of which part of the aid had wrongly ended up with KLM.

The aid, which included a significant loan guarantee and a shareholder loan, was initially approved by the European Commission separately for Air France and subsequently for Air France-KLM, to the exclusion of other business units. However, the Court ruled that the aid benefited not only Air France, but also Air France-KLM and its Dutch subsidiary KLM. 

Ryanair has welcomed the ruling and sees it as a victory in their fight against the approval of the Covid bailout for Air France-KLM. The Irish airline and Malta had both claimed that the aid measures distorted competition. This ruling could have far-reaching consequences for the aviation sector and the way in which financial support during crisis situations is allocated and distributed 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 now assessing the implications, including considering a possible appeal to the Court of Justice of the European Union.

The General Court, informally known as the European General Court, is a constituent court of the Court of Justice of the European Union. It deals with proceedings and complaints taken by individuals and EU countries against the European Union, although certain matters remain reserved for the European Court of Justice.