EU Court Rules Against Approval of State Aid for KLM
May 19 2021 - 7:22AM
Dow Jones News
By Olivia Bugault
The General Court of the European Union issued a ruling on
Wednesday that annuls a decision from the European Commission to
approve Netherlands financial aid of 3.4 billion euros ($4.16
billion) for its flag carrier KLM, a subsidiary of Air
France-KLM.
The court said that the aid that was granted to KLM last year in
order to strengthen the airline's liquidity and mitigate the
effects of the coronavirus pandemic on the airline's balance sheet
was based on "inadequate reasoning."
The European Commission failed to demonstrate that previous aid
of EUR7 billion granted to Air France-KLM's other subsidiary Air
France by the French state didn't also benefit KLM, the court
said.
The Dutch carrier, however, won't have to repay the aid for the
moment.
"Due to the particularly damaging impact of the pandemic on the
Netherlands economy, the General Court suspends the effects of the
annulment pending the adoption of a new decision by the
Commission," the court said.
KLM said that the decision from the European General Court
doesn't affect the airline or the aid it has received for the
moment as the effects of the ruling are suspended.
London-listed low-cost airline Ryanair Holdings PLC, which
launched the legal action against the European Commission's
decision late last year, welcomed the decision.
"While the Covid-19 crisis has caused damage to all airlines
that contribute to the economies and the connectivity of the
Netherlands and Portugal, the governments of these countries
decided to support only their national flag carriers," Ryanair said
following the ruling.
In another ruling on Wednesday, the General Court of the
European Union backed another Ryanair's claim by annulling the EU
Commission's approval of state aid for Portuguese carrier TAP Air
Portugal. The consequences of the judgment are also suspended.
Write to Olivia Bugault at olivia.bugault@wsj.com
(END) Dow Jones Newswires
May 19, 2021 07:07 ET (11:07 GMT)
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