Lufthansa suffered a defeat on Wednesday when Europe's second-highest court agreed with Ryanair and overturned a decision by the European Union's competition regulator to approve its state bailout. The court noted flaws in the EU competition regulators' decision to approve the German government's 6-billion-euro ($6.60-billion) bailout package, as well as a failure to offer incentives for prompt repayment.
Lufthansa, which stated that the company would decide on a next line of action after reviewing the verdict, has already repaid the aid in full, which may minimise the immediate impact of the ruling, but it may have implications for future state bailouts. The German economy ministry stated that it was impossible to estimate the impact of the judgement, which it intended to investigate.
Margrethe Vestager, the EU's top competition regulator, stated that "all options" were on the table but did not specify what her next moves may be following the verdict. This was one of several legal actions taken by Ryanair against rivals' aid, which it claimed unjustly distorted competition, and cleared by the Commission under newer regulations meant at assisting EU governments in assisting enterprises afflicted by the pandemic.
On Wednesday, the court decided in favour of Ryanair against pandemic state aid measures for SAS, stating recapitalisation measures did not offer enough incentives for the Swedish and Danish governments to withdraw promptly. "Today's decisions confirm that the Commission must act as a defender of the level playing field in air transport and cannot sign off discriminatory State aid under political pressure from national governments," a Ryanair spokeswoman stated. SAS stated that the verdict will have no effect on its flight schedule or bookings and that it is still under Chapter 11 bankruptcy protection in the United States, which it filed for last year. It further stated that the judgement does not alter SAS's expectations of receiving clearance for actions taken since 2020, including the United States' participation in the bankruptcy process. "The General Court has found fault with the EU Commission's decision in one respect, but this does not mean that the States' participation in SAS' recapitalization constituted illegal state aid," SAS said in a statement, adding that the EU Commission can reassess the measure, which SAS expects it to do. Following a prolonged travel slump caused by the COVID-19 epidemic, Lufthansa and several other European airlines obtained governmental aid, all of which were conditionally authorised by the EU executive. On legal issues, the Commission may file an appeal with Europe's highest court, the Court of Justice of the European Union.