A European court has upheld a Ryanair challenge to €4.6 billion in state aid given to airlines KLM and TAP.
The General Court of the European Union overturned EU Commission decisions to allow the Dutch give €3.4 billion to KLM, part of Air France KLM, and Portugal's grant of €1.2 billion to TAP.
However, the court suspended its order to annul both aid deals pending a new new decision from the commission on the support given to both airlines.
Ryanair welcomed the ruling that the support given both its rivals breached EU law, which bans state aid where it distorts normal commercial competition.
The Irish group argued that Covid-19 had damaged all airlines, but both countries decided only to support their flag carriers.
"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 clock on the process of liberalisation in air transport by rewarding inefficiency and encouraging unfair competition," said Ryanair.
The court pointed out that KLM’S sister company, Air France had already received €7 billion from the French government.
It ruled as inadmissible the commission’s argument that this was only intended for Air France and would not benefit KLM.
The court decided that the commission had failed to properly justify its decision to allow the Portuguese government support TAP.
KLM said on Wednesday that the ruling had no consequences as the airline would not have to repay the aid until the EU Commission’s competition had looked again at its decision.
EU governments have given up to €30 billion in cash, guarantees, loans and other aid to airlines during the Covid-19 crisis.