Ryanair Wins Legal Challenge Against Lufthansa's State Bailout

25.08.2023 - 13:35 / skift.com

Ryanair on Wednesday won its challenge against Lufthansa’s 2020 state bailout, as Europe’s second-highest court cited errors in EU competition regulators’ decision to approve the German government’s rescue package.

Lufthansa has already repaid the aid in full, which could limit any immediate impact of the ruling, although it could have consequences for future state bailouts.

The German airline said it would analyze the ruling and then decide on a further course of action.

The European Commission cleared Lufthansa’s €6 billion ($6.6 billion) recapitalization subject to a ban on dividends, share buybacks and some acquisitions until the state support was paid back.

Lufthansa and several other European airlines received state aid following a protracted travel slump due to the COVID-19 pandemic, all of which were approved by the EU executive subject to conditions.

Ireland’s Ryanair and German peer Condor subsequently challenged the EU decision on Lufthansa.

This was one of several legal cases brought by Ryanair against the aid provided to its rivals and cleared by the commission under easier rules aimed at helping EU government prop up companies hit by the pandemic.

In 2021, the airline lost its case against state aid granted to Air France and Sweden’s SAS.

“The General Court annuls the decision of the Commission to approve the recapitalization of Lufthansa by Germany, amounting to €6 billion, in the context of the COVID-19 pandemic,” the Luxembourg-based tribunal said.

Judges said the commission “committed several errors, in particular, by considering that Lufthansa was unable to obtain financing on the markets for the entirety of its needs.”

They said the EU competition enforcer also failed to require a mechanism incentivising Lufthansa to buy back Germany’s shareholding as quickly as possible and erred by denying that Lufthansa held significant market power at certain airports.

Additionally, the court said the commission erred “by accepting various commitments that do not ensure that effective competition on the market is preserved.”

Condor welcomed the ruling. Ryanair did not immediately respond to a request for comment.

The Commission can appeal to the Court of the Justice of the European Union, Europe’s highest, on points of law.

The joined cases are T-34/21 Ryanair v Commission (Lufthansa; Covid-19) & T-87/21 Condor Flugdienst v Commission (Lufthansa; Covid-19).