The European Union’s highest court has ruled that the lower General Court erred when it annulled the European Commission’s approval of €3.4bn in Dutch liquidity support to KLM, restoring the decision’s full effect and sending the case back for further examination.
The judgment, delivered on 5 November, is a setback for Ryanair, which has spent years challenging pandemic-era state aid to rival airlines through the EU courts.
What the court decided
The Court of Justice set aside the General Court’s judgment of 7 February 2024, which had annulled the Commission’s July 2020 approval of the Dutch support package following a challenge by Ryanair. The immediate effect is that the Commission’s decision stands again.
The case has been remitted to the General Court, which must now examine the remaining pleas raised by the airline. Judges also criticised the lower court for legal errors in its reasoning, and dismissed part of Ryanair’s case.
In a separate judgment delivered the same day, the Court of Justice threw out Ryanair’s appeal against €321m in German aid granted to the charter airline Condor in 2021.
The background to the aid
The Dutch package was one of dozens of state support measures approved by the Commission during the pandemic under temporary rules that allowed governments to compensate companies for losses caused by travel restrictions.
Airlines were among the largest recipients, because their revenue collapsed almost entirely while their fixed costs, including aircraft leases and staff, continued. The Commission’s approach was to approve support where it was necessary, proportionate and limited in time, and to require recipients to repay it with interest.
Air France-KLM has said that all Covid-19 support received by the group, Air France and KLM, had been repaid with interest by 2023.
Why Ryanair keeps litigating
Ryanair has launched more than a dozen challenges against state aid to competitors, arguing that the support gave flag carriers an advantage that distorted competition and allowed them to price aggressively once demand returned.
The strategy has produced mixed results. Some challenges have succeeded on procedural grounds, forcing the Commission to reopen assessments, but few have resulted in aid being recovered. The litigation is expensive and slow, and its main effect has been to shape how the Commission writes its decisions.
For the airlines that received support, the uncertainty created by the cases has been a persistent distraction. A judgment that annuls an approval does not automatically require repayment, but it reopens a process that can take years to resolve.
What the ruling means for future bailouts
The judgment reinforces the discretion the Commission holds when assessing whether aid is compatible with the internal market, particularly in emergencies where the counterfactual is a disorderly collapse.
That matters for the next crisis. Governments that want to support strategic industries will point to the pandemic precedents, and competitors will challenge them on the same grounds. The court’s message is that the Commission’s economic assessments will be respected unless the error is clear.
For passengers, the practical consequence is indirect but real. State support shaped which airlines survived the pandemic and how much capacity they could restore, and that in turn shaped fares and route networks across Europe.
