European justice invalidates the rescue of Lufthansa by Germany due to covid and rules in favor of Ryanair

BrusselsEuropean justice definitively invalidates Germany's multi-billion euro aid to the airline Lufthansa during the covid pandemic. The General Court of the European Union (CJEU) has overturned the European Commission's decision and, therefore, confirmed the annulment of the German state's rescue of the airline for 6 billion euros, as had been ruled by the General Court of the European Union (GCEU).

The court of last instance of European justice considers that Brussels made an "error" in validating the capital conditions of one of the financial instruments used in the rescue and, for this reason, invalidates the decision of the community executive. However, the Luxembourg court also recalls that the European Commission can take into account and be flexible regarding state aid to the private sector in economic contexts as exceptional and delicate as the coronavirus pandemic.

Germany notified the multi-billion euro aid to the European Commission in June 2020, amid full restrictions by administrations due to the pandemic. This subsidy, of approximately 6 billion euros, was part of a broader package of state aid approved by Berlin with the aim of guaranteeing liquidity and solvency for companies like Lufthansa, which was particularly affected by the health crisis.

Then, and due to the exceptional context, the European Commission approved the recapitalization of the German state in the German company without opening a thorough investigation, as is usual in operations of this magnitude. Shortly thereafter, however, the airlines Ryanair and Condor, which have taken several state aid to airlines to the European courts, appealed against the decision of the Community executive to the court in Luxembourg. The General Court, which is the court of first instance of the European Union, ruled in their favor and overturned the decision of the European Commission. And, subsequently, Lufthansa filed an appeal for cassation with the CJEU, which is the court of highest instance and, therefore, who has the final say in the matter.

Ryanair celebrates the decision

Ryanair has welcomed the CJEU's decision and criticized the European Commission for not more thoroughly examining the decision to accept billions in state aid from Germany to Lufthansa. "The €6 billion aid that Germany gave to Lufthansa for Covid was illegal state aid that distorted competition," says the statement issued by the low-cost airline.