European justice announced on Wednesday that it had annulled the decisions approving France’s massive aid to Air France and Air France-KLM during the health crisis, considering that the European Commission had made an “error” in giving them the green light.
Seized by the airlines Ryanair and Malta Air which considered the aid measures “contrary to Union law”, the Court of Justice of the European Union (CJEU) “allowed these appeals”, she announced in a press release, without the implications of this decision being immediately clear. The concrete consequences of these judgments are uncertain.
State aid, billions of euros which enabled Air France-KLM and its companies to overcome the health crisis which brought global air transport to a halt in 2020, has since been repaid, with interest. “Air France-KLM and Air France take note of the two judgments,” indicated the airline group in a reaction sent to AFP, specifying that the two companies “will examine them carefully (…) to assess the implications”. “Air France-KLM and Air France will study the advisability of filing an appeal for annulment before the Court of Justice of the European Union. At the same time, Air France-KLM and Air France will contribute to any exchange between the French State and the European Commission with a view to the adoption of possible new approval decisions,” according to the same source. In addition, “Air France-KLM recalls that Air France-KLM and Air France respected and applied on April 19, 2023 all the conditions for exiting state aid granted under the European Union’s temporary framework relating to Covid -19”.
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Wednesday’s decision echoes that of May 10, 2023, when the same court canceled two vast airline recapitalization plans, that of Lufthansa by Germany and SAS by Denmark and Sweden. The body, in these cases, had already been seized in particular by Ryanair, an Irish low-cost company, a major critic of state aid which, according to it, distorts competition in air transport in Europe.
On Wednesday, the EU court recalled the facts: “in April 2020, France notified the European Commission of an individual aid measure in favor of Air France, planning to first grant it a state guarantee to amount of 90% on a loan amounting to 4 billion euros granted by a consortium of banks and secondly a shareholder loan amounting to a maximum of 3 billion euros. “According to the Commission, only Air France was the beneficiary of this aid, to the exclusion of all other companies in the Air France-KLM group,” the court underlined in its press release. Subsequently, “in March 2021, France (…) notified the Commission of individual aid in the form of a recapitalization of Air France and the Air France-KLM holding company, for a total amount of 4 billion euros,” the court further indicated.
Among the measures of this plan: “France’s participation in a capital increase project of a maximum amount of one billion euros” and “the conversion of the shareholder loan into a hybrid instrument”. Here too, “according to the Commission, only Air France and the Air France-KLM holding company were beneficiaries of this aid, to the exclusion in particular of (the Dutch company) KLM, a company forming part of the Air France-KLM group”.
For Ryanair and Malta Air, “the Commission erroneously defined the beneficiaries of this aid, by deciding that neither the Air France-KLM holding company”, in one of the decisions, “nor KLM (in the two contested decisions) were beneficiaries. “The Court grants these appeals and annuls the decisions of the Commission. He considers that the latter made an error in the definition of the beneficiaries of the State aid granted” and concludes “that the Air France-KLM holding company (in the first case) and KLM (in the second case) were likely to benefit, at least indirectly, of the advantage granted by the State aid in question.
