EU court annuls decision allowing Portugal to channel €1.2 billion of State aid to TAP

The Court of Justice of the European Union has annulled the decision by the European Commission which approved State aid of €1.2 billion to help salvage loss-making Portuguese airline TAP.

A press release issued today explains the reasoning stems from the decision involving “an inadequate statement of reasons”.

The news comes as a result of a challenge lodged by Ryanair last summer – incensed that some airlines were being ‘bailed out’ for the problems caused by the pandemic by their countries’ governments, when companies like Ryanair have been left to cope on their own (click here).

The court’s decision also annulled the Commission’s green-light to State aid for Dutch airline KLM – but it dismissed Ryanair’s challenge to a €10 billion Spanish fund for virus-hit companies.

Where this bombshell leaves TAP, the issues with insolvent baggage handling company Groundforce, and ‘everything else’ is not explained. It will be for the Portuguese government now to make some kind of statement.

What is clear is that the annulment – and indeed recovery of any funds already handed over .- will now be suspended pending new decisions by the Commission, reports online financialpost.

Ryanair’s focus in all of this has been to argue that State aid to specific airlines violates the Treaty of Europe and rules of competition.

As all reports stress, this is a ‘decision in the first instance’ – meaning it can be appealed.

Portugal – and indeed Holland – now have two months to prepare an appeal.

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