On 24th April, Ryanair boss Michael O’Leary warned that he could consider disputing EU airline bailouts in court. The comment comes after O’Leary said governments have been selective about dishing out state aid. He suggested that some of those airlines receiving assistance did not need it and that flag carriers were getting preferential treatment. Is there something more to these comments?
Billions will be given to inefficient airlines
According to Bloomberg, Micheal O’Leary is looking to challenge EU member states who have “selectively” drafted plans to provide “billions of euros to their inefficient flag carriers.” Earlier this week, the CEO of Ryanair contacted European Commissioner Margrethe Vestager over the alleged discrimination. He urged a stark warning that funds should be allocated more fairly. If Ryanair wins the court battle, these airlines could lose out and suffer the shame of the reversal, according to O’Leary.
In an interview with Sky News, the CEO shared several concerns about the coronavirus pandemic on the airline industry. One of his most stark allegations was the fact that some airlines are chasing state aid unnecessarily. In the interview, he said:
“[Airlines] see this an opportunity, I think, to get one last huge quantity of state aid so they can go around and buy up everybody when this is all over.”
His bold comments call for funds to be dished out more evenly and for airlines to take responsibility for their future where they can.
Ryanair wants a slice of the action
While O’Leary suggested that large airlines shouldn’t be getting such grandiose bailouts, he also indicated that Ryanair should get a look in.
He wants EU countries to look more carefully at how they allocate their state aid, raising the suggestion that airlines receive funding proportionate to the amount of air traffic they occupy. Such a strategy prevents flag carriers from receiving more money than others who are heavily involved in the same markets. Ryanair would, therefore, secure a portion of these bailouts.
The fact that some EU airlines are receiving large bailout packages is a worry for Ryanair, of course, because it is not due to receive any state aid. O’Leary is undoubtedly aware that if other airlines receive large quantities of state aid and his does not, then Ryanair will be somewhat handicapped post-coronavirus. The low-cost airline is currently processing a backlog of around 10 million refunds due to canceled flights in April.
A court case will delay state aid
From Ryanair’s standpoint, it’s fighting for equality. Michael O’Leary wants to call out those who it believes are disproportionately receiving support and also improve its chances for the future. So, what will happen?
We contacted Ryanair to find out more about the legal proceedings. It was unable to comment. However, should the court appearance take place, Ryanair could lengthen the wait for airlines to receive funding. That could be the difference between their demise and success. A U-turn on previously agreed bailouts could be embarrassing for the EU, but is it inevitable? We will update this story as and when we hear from Ryanair.
Do you think Ryanair will be able to secure the decision it seeks? Will the EU reverse its bailouts? Have your say in the comments.