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European Justice annuls for the second time the rescue of 3.4 billion to KLM

The bailout was appealed by Ryanair, which is now asking the European Commission for “appropriate measures to repair part of the damage caused to competition.”

The General Court of the European Union (TGUE) has again annulled the 3.4 billion euro bailout of the Dutch airline KLM, which was authorized on two occasions by the European Commission in the context of the coronavirus pandemic and appealed on both occasions by its rival Ryanair. The ruling known this Wednesday is the second that overturns a decision by Brussels to allow the injection of public aid by the Netherlands to face the losses derived from the
travel restrictions adopted to contain the spread of covid.

Ryanair has welcomed the ruling and calls on the European Commission to order the Netherlands to withdraw this state aid package from Air France-KLM and “impose appropriate measures to repair at least part of the damage to competition caused by this huge bailout.” state”.

The community Executive authorized the rescue for the first time in 2020 and it consisted of a state guarantee for a bank loan and another credit from the State, with the aim of providing temporary liquidity to KLM. This aid was appealed by Ryanair and later struck down by the General Court of the EU for “lack of motivation with respect to the determination of the beneficiary of the measure in question.”

The European Justice then decided to suspend the effects of the annulment until the European Commission adopted a new decision, something that the institution did in July 2021, declaring again that the rescue was “compatible with the internal market” and specifying that “KLM and Its subsidiaries were the only beneficiaries of the aid, excluding the other companies of the Air France-KLM group.

Ryanair also appealed this second decision and, once again, the court based in Luxembourg has annulled the rescue by estimating that “the Commission erred in the definition of the beneficiaries of State aid by excluding the Air France-KLM holding company and Air France , two companies that are part of the group.” In particular, the ruling concludes that these two entities “could benefit, at least indirectly, from the advantage granted by State aid” after examining the capital, organic, functional and economic links of the companies that make up the group, the contract that carried out the rescue, the type of measure granted and the context.

Ryanair reaction

The director of Ryanair in Spain, Elena Cabrera, has highlighted that “one of the greatest achievements of the EU” is having created a single market for air transport, but that the approval of this aid was “contrary to the fundamental principles of law.” of the Union, such as the principle of non-discrimination on the basis of nationality.”

For this reason, he emphasizes that this Wednesday’s ruling confirms that the Commission “must act as guardian of equal conditions” in air transport and “cannot approve discriminatory state aid” granted by national governments.

This is not the only case in which the company considers that irregularities have been committed. Thus, it considers that during the pandemic “more than 40 billion euros in discriminatory state subsidies were given to EU flag airlines”, of which the CJEU has already analyzed those of SAS, Lufthansa, Air France-KLM and others. Italian.

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Source: Cincodias



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