A EUROPEAN COURT has annulled the decision by the European Commission to approve Germany’s multi-billion-euro bailout of airline Lufthansa during the Covid-19 pandemic, saying it had made “several errors”.

The ruling following two actions for annulment of the Commission’s decision brought by rival airlines Ryanair and Condor in 2021. 

Lufthansa, one of Europe’s biggest airline groups, received the cash injection in 2020 when the pandemic brought global air travel to a halt.

It paid the cash back the following year as restrictions were eased and travel rebounded, while the German government sold its final stake in the airline last year.

However, the EU General Court has said the commission “committed several errors”, and annulled its decision to approve €6 billion of bailout funds.

The mistakes included considering Lufthansa could not obtain financing on the markets to cover all its needs and failing to require a mechanism incentivising Lufthansa to buy back Germany’s shareholding as quickly as possible, it said.

Another error was accepting various commitments that did not ensure that effective competition on the market was preserved, it added.

Reaction

There has been no immediate reaction from the European Commission. It can still appeal the ruling to the European Court of Justice.

Ryanair has welcomed the ruling, calling it a “victory for the EU internal market”. 

“Today’s judgements confirm that the Commission must act as a guardian of the level playing field in air transport and cannot sign off discriminatory State aid under political pressure by national governments,” a Ryanair spokesperson said in a statement. 

“The court’s intervention is a triumph for fair competition and consumers across the EU,” they said. 

The spokesperson said that during the Covid-19 pandemic over €40 billion in “discriminatory State subsidies has been gifted to EU flag carriers”.

“Unless halted by the EU Courts in line with today’s ruling, this State aid spree will distort the market for decades to come,” they said. 

“Europe’s emergence from the Covid-19 crisis with a functioning single market depends on airlines being allowed to compete on a level playing field. Undistorted competition eliminates inefficiency and benefits consumers through low fares and choice. Unjustified subsidies, on the other hand, encourage ineffectiveness and will harm consumers for decades to come,” the spokesperson added. 

Given the bailout has been paid back, it is not clear if the ruling will have any impact on Lufthansa.

The airline said it would analyse the decision and decide on further action, while noting the “stabilisation measures” were “already fully terminated before today’s court ruling”.

Its shares were up 0.2% on the Frankfurt Stock Exchange after the ruling.

Along with other carriers, Lufthansa has rebounded strongly since travel restrictionswere eased, and in 2022 returned to annual profit after two years of losses.

With reporting by © AFP 2023