KLM wins appeal concerning €3.4 billion in Dutch aid, while the case returns to the General Court

KLM won before the Court of Justice of the European Union the annulment of the judgment by which the EU General Court had annulled the approval of the €3.4 billion Dutch support granted during the pandemic. By its judgment of 5 November 2026, the Court rejected Ryanair’s challenge concerning the identification of the aid beneficiaries, but referred the case back to the General Court for examination of the other four pleas in law. The General Court had substituted its own assessment for that of the European Commission without demonstrating a manifest error, the judges held. The outcome of the appeals does not end the litigation and does not represent the granting of new financial support.

In briefThe Court of Justice annulled the 2024 judgment that had annulled approval of the aid for KLM and rejected Ryanair’s plea concerning the beneficiaries. Four other pleas return to the General Court, so the litigation continues.

The links between KLM, Air France and the holding company could be analysed to identify the beneficiaries. The General Court nevertheless had to demonstrate a manifest error in the Commission’s assessment, and the Court found that a different assessment of the same elements was insufficient.

The €3.4 billion represented available financing, in the form of a state loan and a guaranteed bank facility. KLM reported that it used €942 million, repaid in 2022, and that it closed the facilities in 2023.

In 2024, the Commission reassessed the French and Dutch aid, totalling €10.4 billion, at Air France-KLM group level. That approval is the subject of separate proceedings, still pending according to the Court’s press release.

The dispute concerns the Commission’s decision of 16 July 2021, which considered that only KLM and its subsidiaries benefited from the Dutch support. This was a new approval of the package initially authorised in July 2020: the General Court had annulled the first decision in May 2021 for insufficient reasoning regarding the identification of the beneficiary. Ryanair also challenged the second approval, arguing that Air France and the Air France-KLM holding company should have been included. The General Court upheld its action on 7 February 2024 and annulled the Commission’s decision, considering that the links within the group prevented limiting the beneficiaries to KLM. The Commission, KLM, Air France and Air France-KLM appealed that judgment in three appeals, which were heard together.

The €3.4 billion package combined a bank facility of up to €2.4 billion, 90% guaranteed by the Dutch State, with a subordinated state loan of up to €1 billion. The amount represented the financing made available, not money entirely used by the company. KLM announced in April 2023 that it had used €942 million in 2020, had fully repaid that amount in June 2022 and had closed the remaining facilities on 17 April 2023.

The Court retained the legal criterion used to identify the beneficiary. In the field of state aid, several legally separate companies may form a single economic unit. The analysis may take account of the control exercised by one company over another, economic and organisational links, and the contracts through which the support is granted. Those contracts may make it possible to identify a single company within the group as the actual beneficiary. Accordingly, the General Court was entitled to verify whether the aid could also benefit entities other than those designated by the Commission.

The error lay in the way the General Court reviewed the Commission’s assessment. The Commission enjoys broad discretion for complex economic and social analyses, including when determining the beneficiary of aid. To overturn its conclusion, the court had to show a manifest error, on the basis of elements that made the assessment implausible. The Court also emphasised that judges must verify the accuracy, reliability and consistency of the evidence, whether it contains the relevant information and whether it supports the conclusions drawn. In this case, the General Court largely attributed different weight to the same facts without demonstrating that the Commission’s assessment was implausible.

The judgment provides concrete examples. The holding company had veto rights and the right to approve the subsidiaries’ financing operations exceeding €150 million. There was coordination concerning financing, fleet and commercial activity, as well as cost-sharing agreements between Air France and KLM. The Commission had already taken those links into account and considered that the two companies retained considerable economic autonomy. According to the Court, the General Court’s findings concerning integration and cooperation within the group were insufficient to demonstrate a manifest error in that assessment.

The Court also examined the contractual commitments intended to reserve the aid for KLM. The fact that some commitments had been undertaken by the holding company did not eliminate their effects. The Court stated that support granted to a company may also have economic effects on the holding company that owns it. The fact that the commitments did not completely eliminate those effects was not, in itself, sufficient to exclude their role in identifying the actual beneficiary. The Court therefore rejected Ryanair’s first plea, concerning the beneficiaries.

The other four pleas had not been examined by the General Court. They concern non-discrimination, the freedom to provide services and the freedom of establishment; the application of Article 107(3)(b) of the Treaty on the Functioning of the EU, which permits the authorisation of aid intended to remedy a serious disturbance in the economy of a Member State; Ryanair’s procedural rights; and the Commission’s obligation to state reasons for its decision. The Court explained that resolving them requires factual assessments for which it does not have all the necessary information. This is why the case was referred back to the General Court.

Meanwhile, on 10 July 2024, the Commission adopted a new decision concerning the French and Dutch measures for Air France-KLM. It reassessed the existing support, totalling €10.4 billion, taking the group as the beneficiary, and declared it compatible with EU state aid rules. That decision provides that it would become devoid of purpose for the measures concerned if the relevant appeals succeeded and the legality of the earlier approvals were ultimately confirmed by the EU courts. The success of the appeals is therefore not the only condition laid down by the new decision. The judgment of 5 November 2026 nevertheless leaves four pleas to be decided in the KLM case. The new approval is itself the subject of separate proceedings brought by Ryanair and Malta Air, T-250/25, which the Court’s press release states are still pending.

https://2eu.brussels/ro/news/klm-castiga-recursul-privind-ajutorul-neerlandez-de-3-4-miliarde-de-euro-iar-dosarul-revine-la-tribunal