€3.4 billion in coronavirus support to KLM was illegal state aid, EU court rules

The European Court of Justice has annulled the previous approval for 3.4 billion euros of state aid that KLM received during the coronavirus crisis, declaring it illegal state aid. The case was filed by the airline Ryanair, which considered the COVID-19 support from the Dutch government unfair competition.

The court convicted the European Commission, which gave the Netherlands permission for state aid in 2020. According to the General Court of the EU Court, the European Commission “erred in defining the beneficiaries of the state aid granted.” It did not sufficiently investigate whether only KLM and its subsidiaries would benefit from the support of the Dutch government, and not also Air France and the holding company Air France-KLM in which the two airlines are combined.

The General Court concluded that “the Air France-KLM holding and Air France were capable of benefitting, at least indirectly, from the advantage granted by the state aid in question.”

The European Commission and KLM can appeal against the ruling.

In December, the EU court made an identical ruling on the French state aid to Air France during the pandemic. According to the court, KLM could also have benefitted from the 11 billion euros Air France and the holding company received from the French state.