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Law360, London (April 14, 2021, 6:29 PM BST ) Europe's second highest court dealt a blow to Ryanair on Wednesday after it upheld state-aid packages designed to keep the budget airline's rivals aloft due to the downturn in travel.
The European Union's General Court ruled that state aid granted by Finland, Denmark and Sweden to Scandinavian Airlines and Finnair complied with the bloc's rules on competition.
Ryanair filed legal challenges against European Commission decisions allowing countries to offer financial packages to many domestic carriers hit hard by travel restrictions. The competition watchdog has approved more than €3 trillion ($3.6 trillion) in state aid measures, including the airline industry.
But the Luxembourg-based court found that Finland's decision to guarantee a €600 million loan to Finnair from a pension fund was necessary to stave off the airline's collapse.
The airline flew two-thirds of all Finland's passenger's in 2019, and its failure "would have had serious consequences for the Finnish economy," the court wrote in a press release.
The guarantee, which covers Finnair's operating costs, is the "appropriate" response "to contribute to remedying the serious disruption to the Finnish economy caused by the COVID-19 pandemic."
Aid measures introduced by Denmark and Sweden to help SAS with canceled and rescheduled flights also complies with EU law, as the airline's market share is much higher than its closest competitors, the court ruled in a separate decision.
The Scandinavian countries' €260 million guarantees do not breach state aid rules "given the evolving nature of the pandemic" and the steps the commission has taken to ensure the airline isn't overcompensated, the court ruled.
The favorable treatment is "appropriate" given the airline's outsized role in the region, the court added, noting that "Ryanair does not demonstrate how the exclusivity of the measure is capable of discouraging it from establishing itself in Denmark or Sweden or providing services from either of those countries or to them."
The company said in a statement that it would appeal the decisions, as the governments were choosing only to support their countries' flagship carriers.
"The European Commission's approvals of the Finnish, Danish and Swedish state aid went against the fundamental principles of EU law," a spokesperson said. "Today's judgments set the process of liberalization in air transport back by 30 years by allowing Finland, Denmark and Sweden to give their national flag carriers a leg up over more efficient competitors, based purely on nationality."
The rulings are part of a recent flood of pandemic-era state aid approvals signed off by the commission since March 2020.
Ryanair has appealed the commission's approval of the German government's €9 billion bailout of Lufthansa, with the budget airline's CEO Michael O'Leary calling the aid package "a spectacular case of a rich EU member state" benefiting its own industries to "the detriment of poorer countries."
The airline has also contested Portugal's €1.2 billion rescue loan for TAP Air Portugal, among others.
In February, the airline lost its fight against France's decision to let French airlines defer aviation taxes to save money during the COVID-19 pandemic.
A spokesperson for the commission said Wednesday that the ruling upholds the regulator's framework for assessing whether EU nations can provide support.
"In particular, the General Court clarified that individual aid measures (i.e. support to individual companies) are possible under these two legal bases, without infringing the principle of non-discrimination," the spokesperson said.
The Swedish, Danish and Finnish aid "did not constitute a breach of the principle of non-discrimination on grounds of nationality nor did they involve an unjustified restriction on the freedom to provide services," the spokesperson added.
Ryanair is represented by Esfandiar Vahida, George Metaxas and Stefan Rating of Oswell & Vahida.
The commission is represented internally.
Complete counsel information for Sweden, Denmark and Finland wasn't available.
The cases are Ryanair DAC v. Commission, case numbers T-388/20, T-378/20 and T-379/20, in the General Court of the European Union.
--Editing by Alyssa Miller.
For a reprint of this article, please contact reprints@law360.com.
