Ryanair welcomes EU court decision annulling state aid to TAP

  • Lusa
  • 19 May 2021

The Irish 'low cost' airline welcomed the decision of the Court of Justice of the EU annulling the endorsement of the €1.2 billion state aid to TAP.

Ryanair on Wednesday welcomed the decision of the Court of Justice of the European Union (EU) annulling the European Commission’s endorsement of the €1.2 billion state aid to TAP.

In addition to annulling the EU executive’s decision on TAP, requesting a new statement of reasons, the General Court (first instance) today issued a similar ruling on the Dutch state aid of €3.4 billion Brussels approved for KLM, also ordering the annulment of this approval for “insufficient reasoning”.

Reacting to both decisions, Ryanair said in a statement that “today’s judgments in two of the more than 20 appeals brought before the General Court to date are an important victory for consumers and competition”.

“One of the EU’s greatest achievements is the creation of a single market for air transport, [but] the European Commission’s approvals of state aid to Air France-KLM and TAP went against the fundamental principles of EU law and reversed the air transport liberalisation process, rewarding inefficiency and encouraging unfair competition,” the low-cost airline said.

Ryanair further notes that “during the Covid-19 pandemic, more than €30 billion of discriminatory state subsidies were granted to EU flag carriers.”

In addition to these two cases, several other actions have been brought by Ryanair before the General Court against state aid approved by the European Commission for aviation at a time of crisis generated by the pandemic.

As a general rule, in the judgments handed down so far, the General Court has favoured the European Commission.

That has not been the case as regards TAP. The General Court today stated that ‘the Commission’s decision declaring the aid granted by Portugal to the airline TAP compatible with the internal market is annulled for not being sufficiently reasoned’.

Even so, the structure explained that ‘the effects of the annulment – including the recovery of the aid – are suspended pending a new decision’.

At stake then is the appeal filed in that body in July 2020 by Ryanair against state aid to the Portuguese flag carrier TAP, with the argument that this Portuguese support violates the European treaty and competition rules.

The Irish ‘low cost’ airline’s aim with this action was to annul the decision of 10 June 2020, when the EU executive gave the ‘green light’ to Portuguese emergency aid for TAP.

This was a €1.2 billion state support to meet immediate liquidity needs given the Covid-19 pandemic, with predetermined conditions for its repayment.

As the decision of the General Court known today is at first instance, the parties can still appeal to the Court of Justice of the EU and have two months to do so.

In 2020, TAP returned to the control of the Portuguese state, which came to hold 72.5% of its capital, after the company was severely affected by the Covid-19 pandemic and the European Commission authorised state aid of €1.2 billion.

This year, at the end of April, the European Commission approved new and intermediate state aid from Portugal to TAP, to the value of 462 million euros, to once again compensate losses resulting from the pandemic and, according to the airline, ensure liquidity until the restructuring plan is approved by Brussels (which is still ongoing).