Ryanair (FR, Dublin International) has said it will appeal a ruling by the General Court of the European Court of Justice on April 14 which overturned its complaint against Covid-related government support for SAS Scandinavian Airlines (SK, Copenhagen Kastrup) and Finnair (AY, Helsinki Vantaa).
The court underlined the European Commission’s belief that Swedish, Danish, and Finnish financial support for the two flag carriers in the wake of pandemic-related travel restrictions was allowed under revised European Union state aid rules. In August 2020, the commission had approved Danish and Swedish plans to contribute up to SEK11 billion kronor (USD1.3 billion) to the recapitalisation of SAS.
In March 2021, the commission approved a Finnish government loan to Finnair of EUR351.38 million euros (USD420 million), a measure that took the form of a hybrid loan with the aim of compensating it for losses sustained during the travel shutdowns between March 16 and December 31. It had already approved, in June 2020, Finnish plans to contribute to the recapitalisation of Finnair with the state investing in new shares in a rights issue launched by the airline, equivalent to a EUR286 million (USD343 million) public contribution.
The court ruled that the financial support to SAS was appropriate under Article 107(2) of the Lisbon Treaty, even if it benefited just one company. Consequently, the European Commission “had not erred in law solely because the aid measures for SAS did not benefit all of the victims of the damage caused by the Covid-19 pandemic,” it said.
The court ruled that the SAS credit facility had been proportionate and also pointed to the fact that the commission had insisted on reviewing the pandemic’s impact for several months after the aid was given, to ensure it was not being over-compensated.
Moreover, the Swedish and Danish government support did not discriminate against other airlines “given that SAS has the largest market share in Denmark and Sweden, and that that market share is much higher than that of its closest competitor in those two countries.”
As for the Finnair case, the state loan guarantee was necessary “to maintain Finnair’s activities and prevent its possible failure from further disrupting the Finnish economy,” the court said.
In an April 14 statement responding to the court ruling, Ryanair alleged that Finnair had “benefited from more than EUR1.2 billion [USD1.44 billion] in state aid since the beginning of the pandemic.”
“One of the EU’s greatest achievements is the creation of a true single market for air transport. The European Commission’s approvals of the Finnish, Danish and Swedish State aid went against the fundamental principles of EU law. Today’s judgments set the process of liberalisation 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,” Ryanair protested.
If Europe is to emerge from this crisis with a functioning single market, it added, then airlines must be allowed to compete on a level playing field. Calling the European Commission’s approach to state aid since the beginning of the pandemic “spineless” as it allowed member states “to write open-ended cheques to their inefficient zombie flag carriers in the name of faded national prestige,” the Irish carrier stressed that subsidies “encourage inefficiency and will harm consumers for decades to come.”
Finnair declined to comment further on the ruling or the appeal, while SAS told ch-aviation: “SAS welcomes the decision which confirms that the aid provided to aviation by the governments is compatible with EU laws.”
