Ryanair Appeals EU’s Lufthansa State Aid Approval

Ryanair has long been vocal about the amount of support some airlines are receiving to help them cope with the global downturn. At the end of last week, the airline took things a step further by filing documents with the European Union challenging the German Government’s €6 billion ($7.3 billion) bailout for Lufthansa.

Ryanair has taken out a legal filing against the EU’s decision to allow German aid for Lufthansa. Photo: Getty Images

As far back as last summer, Ryanair CEO Michael O’Leary was critical of several EU nations for their state aid policies for specific airlines. The Ryanair boss said that the favoritism being shown to some carriers, mainly flag carrier airlines, meant that other airlines would struggle.

He even went as far as saying that some may even emerge from the downturn in a stronger position than before. With some airlines left struggling, larger airlines that received aid could be in a position for takeovers.

O’Leary has also challenged aid provided to Scandinavian Airlines, Air France, Finnair, KLM, and TAP Air Portugal. But this week it was Lufthansa who came under legal fire from Ryanair. The Irish carrier has filed documents with the European Union court requesting they overturn Germany’s bailout package. Ryanair has said the support package for Lufthansa “discriminates unlawfully between EU airlines”.

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An unfair advantage

Ryanair has said the German government should be helping other carriers that operate in Germany as much as it helps Lufthansa. This should, according to Ryanair, include changes to slots regulations. The current rules prevented Ryanair from picking up key slots at both Munich and Frankfurt airports last year.

Ryanair Michael O'Leary
Ryanair CEO Michael O’Leary has been very vocal about how much government aid has been provided to airlines. Photo: Getty Images

Ryanair’s legal actions suggest that the European Commission which is supposed to prevent governments from favoring one business over another is not doing its job properly. If this is taken to be true, it could have a massive impact on any European airline which has received state aid over the past year. Of course, it could be very good news for airlines that did not get state aid.

While Lufthansa has not responded to requests for comment, the airline hasn’t helped itself by declaring that it may not actually use all of the €6 billion loan it has been granted. This could mean the airline ends up financially stronger than before. According to the Irish Times, Ryanair commented that,

“It is extraordinary that Lufthansa announced it did not need so much state aid, yet the German government was committed to favouring its ‘global champion’ instead of putting measures in place to support air traffic recovery in a manner that would benefit all airlines delivering traffic at German airports,”

Lufthansa government loan
Lufthansa has previously said it did not need the full loan amount granted by the German Government. Photo: Getty Images

Ryanair’s position

Ryanair has so far not received any EU-backed aid. Ryanair has also managed to keep its pilots and planes ready so that it can prepare to offer flights the second demand increases. Of course, it is difficult to take full advantage of this if the airline cannot pick up extra slots.

Ryanair’s legal filings may take over a year to be heard and even longer if the appeals go to the European Court of Justice. While Ryanair hasn’t provided much information regarding what exactly is in the legal filings, the message is very clear. And opinion on Ryanair’s stance is divided. Some believe the airline has a point while others think Ryanair is wasting time and money. Either way, we haven’t heard the last of this yet.

What do you think of Ryanair’s filings? Do they have a point or are they just being difficult? Let us know what you think in the comments.