On May 8, 2024, the European Union’s General Court annulled a previous decision made by the European Commission (EC) to approve a restructuring aid package for German leisure airline Condor in 2021. The EC approved the €321 million ($344.4 million) funding package in July 2021, allowing the German government to provide financial aid to the airline to support the restructuring and ongoing operations of the airline during and following the COVID-19 pandemic, thereby throwing the carrier a financial lifeline.
The case was brought by the Irish low-cost carrier Ryanair which had challenged the decision of the Commission before the EU General Court. Ryanair has historically retained a publicly vociferous stance in its objections to state aid being provided to keep European competitors flying, which it states goes against free market competition rules. Condor had faced financial challenges throughout 2021 following the insolvency of its former owner, the German-based Thomas Cook travel group.
On May 8, 2024, the General Court stated in its ruling that the Commission should not have approved the rescue package without carrying out a formal investigation. It added that Ryanair had demonstrated to a “sufficient degree” that the Commission should have had doubts when giving the go-ahead for the state aid. The court should have also questioned whether the package satisfied the requirements of existing EU guidelines, such as adequate burden sharing.
In its ruling, the court highlighted the specific requirement that any restructuring aid that would improve the airline’s equity position should only be granted if the state would also have seen a reasonable share of any future gains in the company’s value.
Furthermore, the court added that any state should intervene by providing financial aid only after losses have been attributed to existing shareholders and debt holders, while a State should also gain “a reasonable share of future gains”. The court determined that there was no evidence suggesting that the EC looked into whether the aid would provide Germany with a reasonable share of future gains in the value of Condor.
Despite the state aid decision being annulled, Ryanair did not quite receive complete satisfaction of its complaint being upheld. The court ruled that while Ryanair was allowed to annul the EC’s decision, the Irish low-cost carrier could not challenge the contents of the decision since the carrier had not adequately demonstrated that the aid provided to Condor had led to “a substantial adverse effect on its competitive position”.
However, despite this, a Ryanair spokesperson described the ruling as “a triumph for fair competition and consumers”.
“The European Commission’s approval of the German aid to Condor went against the fundamental principles of EU law,” said a Ryanair statement. “Today’s judgment confirms once again that the Commission must act as a guardian of the level playing field in air transport and cannot sign off discriminatory State aid promoted by national governments.”
Ryanair also highlighted the fact that the General Court has already ruled that state aid received by other airlines in 2020 and 2021, including Lufthansa, SAS, and Air France-KLM, was unlawful – all cases in response to formal complaints lodged by Ryanair itself.
“Today’s judgment further underlines the need for the European Commission to immediately act to recover these illegal state-aid packages and order remedies to restore at least some of the damage done to competition and consumers,” the statement concluded.