Court: Europe erred in approving €3.4B Dutch State aid for KLM

The 3.4 billion euros of State aid provided by the Netherlands to beleaguered airline KLM should not have been approved by the European Commission, the General Court of the European Union said in a ruling issued on Wednesday. The Dutch flag carrier airline will not have to immediately repay the aid, pending a new assessment from the Commission..

The European Commission should have taken more consideration into the structure of parent company Air France-KLM at the time. In its assessment of Dutch plans to provide a State loan and loan guarantees to KLM in June 2020, the Commission should have examined the 7 billion euro aid package provided by the French State to Air France, and how that could be used to benefit sister airline KLM.

Thus, the court rejected the Commission's argument, and annulled the decision to approve the Dutch financial aid package.

"However, due to the particularly damaging impact of the pandemic on the Netherlands economy, the General Court suspends the effects of the annulment pending the adoption of a new decision by the Commission," the court wrote.

Similarly, the court also ruled against the Commission in approving State aid from Portugal to the major airline there, TAP.

An appeal against either of the court's rulings can be filed by July 29.