EU funds for holiday flyers Aid for Condor declared null and void

As of: 06/09/2021 1:00 p.m.

The EU court annulled a decision of the EU Commission that allowed German aid for the Condor airline. Ryanair had sued against the release. Ryanair has achieved a success against state corona aid for the German airline Condor before the EU court (EGG). The judges overturned the EU Commission’s decision to approve the aid. The decision of the Brussels authority was not sufficiently justified, said the court in Luxembourg. In practice, however, this initially has no consequences: the effect of the declaration of invalidity was suspended until the EU Commission has passed a new decision. This means that Condor does not have to repay the money immediately.

Loan of 550 million euros

Germany had registered the aid in favor of Condor in Brussels in April 2020. This involved two government-secured loans with reduced interest rates in the amount of 550 million euros. The background was damage caused by the cancellation or postponement of flights due to travel restrictions in the corona pandemic. The low-cost airline Ryanair complained, among other things, of violations of the free movement of services and filed a lawsuit against the release.

Connection with bankruptcy proceedings?

At Condor, the situation had worsened due to the bankruptcy of the parent company Thomas Cook in autumn 2019, which preceded the corona crisis. The airline was only able to continue working with rescue aid of 380 million euros, which was also approved by the EU. The insolvency proceedings initiated at the time had to be extended after the outbreak of the Corona crisis because the new owner, the Polish aviation company PGL, had jumped off. The 550 million euros in government aid also included costs that resulted from the extension of the insolvency proceedings at Condor. Ryanair had argued that the commission had not explained why it had even included the extended insolvency period when calculating the damage to Condor from the corona crisis. The Condor case is one of many in which Ryanair is taking action against state corona aid for competitors. So far, the plaintiff has succeeded in some cases but not in others. (Case T 665/20)

The low-cost airline Ryanair failed again with several lawsuits against state aid for competing airlines in connection with the Corona crisis. The court of the European Union ruled in the first instance that the aid granted to Finnair and the Swedish-Danish airline SAS in 2020 was compatible with EU law and therefore permissible. The EU court confirmed the legality of individual state aid in the corona pandemic for the first time. These are possible to compensate for economic damage caused by extraordinary events.

EU judges: State aid proportionate

With regard to SAS, the EU judges emphasized, among other things, that the measures were proportionate. According to the court, the fact that the governments supported SAS and other airlines did not can be justified by the fact that SAS had a much larger market share in its home markets than its competitors. At Finnair, they found in particular that a possible default would have had a significant impact on the Finnish economy. In both cases, the state aid is suitable to achieve the aim pursued.

Ryanair announces appointment

Ryanair does not want to accept the decisions of the EU court and immediately announced that it would appeal to the European Court of Justice (ECJ). The unfair subsidies should be prohibited in the interests of competition and consumers in Europe, according to the company. It is not the first lawsuit that the low-cost airline is bringing against its competitors: In the past few months, Ryanair had already sued the EU court in 16 cases against state aid. Most recently, the company failed in February with the crackdown on aid from France and Sweden. Because of the almost complete collapse of business in the Corona crisis, many airlines in Europe could only be saved from bankruptcy with state financial aid. Ref .: T-378/20, T-379/20 and T-388/20