An EU court has halted a German bid to give €550 million state aid to airline Condor following a challenge by Irish carrier Ryanair.
Germany agreed to lend Condor €550 million in state loans last year, after Covid-19 restrictions grounded air travel, in a move later approved by the European Commission.
The General Court of the European Union annulled the commission's decision to allow the aid on Wednesday, but suspended its ruling pending a further decision by officials.
Ryanair had argued that the commission failed to take into account the damage caused to Condor’s business by its own insolvency when it ruled that the aid from the German state did not breach EU law.
Condor was part of the Thomas Cook Group, which collapsed in 2019, forcing the airline to file for insolvency, after which the German government loaned it €380 million.
The insolvency proceedings were extended to April 2020 when an investor lined up to rescue the airline pulled out of the deal.
The commission declared that Germany’s aid to the airline was compatible with EU law as it was meant to compensate Condor for damage caused by natural disasters and exceptional circumstances.
‘Decisively’
In its ruling, the general court states that the commission should have examined carefully whether or not the damage suffered by Condor was “decisively” the result of the airline having to cancel flights once the pandemic struck.
Accordingly the court annulled the decision. However, it said that as its ruling stemmed from the fact that the statement of reasons given by the commission for allowing the aid was inaccurate, it would suspend the annulment pending a new decision.
Ryanair welcomed the finding. The Irish group pointed out that while Covid had hit all airlines, Germany had decided to support only its “inefficient national carriers” including Condor.
“The German government aid to Condor – both in 2019 and 2020 – went against the fundamental principles of EU law and has distorted the market to the detriment of consumers,” said Ryanair.
“Today’s ruling is an important victory for consumers and competition.”
Ryanair pointed out that EU governments had given €30 billion in aid to former flag carriers through the Covid-19 crisis.
