Air France-KLM Challenges EU Court Decisions on Covid-19 State Aid

Air France and its parent company, Air France-KLM, have filed appeals against two rulings by the European General Court concerning state aid received by the French airline during the Covid-19 pandemic. The appeals target the court’s decisions from December 2023, which questioned the European Commission’s approval of various French state aid measures aimed at supporting the airline through the crisis.

These legal challenges initiated by Ryanair and its subsidiary Malta Air criticized the financial support provided by certain EU member states to their national carriers, arguing it constituted unfair competition. The court’s findings highlighted a misjudgment by the European Commission in its exclusion of both the Air France-KLM holding and KLM from the list of beneficiaries of the state aid granted to Air France.

Air France-KLM emphasizes that both the group and Air France have adhered to the conditions set for receiving the aid, ensuring full repayment. The French government’s assistance package to Air France amounted to a total of EUR7 billion (USD7.6 billion) in late April 2020, with an additional EUR4 billion (USD4.4 billion) earmarked for Air France-KLM in March 2021, deliberately excluding KLM.

The case also draws attention to a similar situation involving KLM, which received EUR3.4 billion (USD3.7 billion) in Dutch state aid. This financial rescue was similarly contested by Ryanair, leading to a second annulment by the General Court of the Commission’s approval of the aid.

These appeals by Air France-KLM underline the group’s determination to defend the legality of the state aid measures, which were crucial for the airline’s survival during the unprecedented challenges posed by the pandemic. As the case progresses, the airline industry watches closely, recognizing the potential implications for future government support measures and competition within the European aviation sector.