Air France-KLM was the beneficiary of separate French and Dutch state aid during the Covid-19 pandemic, and that aid to the group was “necessary, appropriate, and proportionate to remedy a serious disturbance” in the economies of France and the Netherlands, the European Commission said in a statement - circumventing two General Court decisions that annulled the aid approvals.
“Air France-KLM Group is a major network airline playing a key role in both the Dutch and French economies. As a result of the imposition of travel restrictions to limit the spread of the coronavirus, Air France-KLM Group suffered a significant reduction of its services, which resulted in high operating losses,“ the authority’s executive vice-president in charge of competition policy, Margrethe Vestager, recounted.
“Following the General Court judgments annulling the initial decisions, the Commission has found that EUR10.4 billion (USD11.3 billion) in liquidity support to Air France-KLM Group complies with state aid rules. Air France-KLM Group required the state guarantee and the state loan to obtain vital liquidity to face the difficult coronavirus period and they were granted in line with the Temporary Framework, irrespective of the definition of the beneficiary,” she added.
The General Court annulled the previous state aid approvals in December 2023 and in February this year, respectively, arguing that it was not only Air France in one case and KLM in the other benefitting from the aid, as other group members and the group itself were seen as beneficiaries even though they were not listed as such in the submissions.
The EUR10.4 billion euros (USD11.3 billion) that has been approved at group level, is made up of EUR7 billion (USD7.6 billion) in French aid to Air France (AF, Paris CDG) (a guarantee on bank loans of EUR4 billion (USD4.3 billion) and a loan of EUR3 billion (USD3.3 billion)) and EUR3.4 billion (USD3.7 billion) in Dutch aid to KLM Royal Dutch Airlines (KL, Amsterdam Schiphol) (a guarantee on bank loans of EUR2.4 billion (USD2.6 billion) and a loan of EUR1 billion (USD1.1 billion)).
“Air France-KLM welcomes today’s decision by the European Commission confirming anew that the liquidity support measures granted to its airlines by the French and Dutch states during the Covid-19 crisis were compliant with EU state aid rules. As a reminder, these liquidity measures granted in 2020 took the form of state-guaranteed loans and state loans. The Dutch and French aid measures were repaid in full by June 2022 and April 2023, respectively,” the group said in a statement.
However, it added that the new decision has no impact on appeals lodged by the European Commission, Air France, KLM, and Air France-KLM against the judgments of the General Court regarding the initial annulments. The Court of Justice of the European Union is yet to decide on these appeals.
The two cases went to court as they were part of Ryanair’s (and its subsidiary Malta Air’s) broader campaign against pandemic-era state aid, which stressed that governments favoured flag carriers as opposed to low-cost carriers. The Air France and KLM cases were previously wins for the Irish carrier, whereas it lost an appeal on a EUR600 million (USD650 million) cash injection to Finnair, as well as a legal challenge pertaining to pre-pandemic state aid to Condor. The airline has appealed on state aid approvals for state carriers in over two dozen cases.
