ECJ: AUA subsidy in conformity with EU law

Jul 28, 2021 Benn-Ibler Rechtsanwälte

The General Court of the European Union confirmed the Commission's decision of 6 July 2020 that the state subsidy of €150 million granted to the airline Austrian Arlines AG (AUA) was compatible with EU state aid law under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU).

The action for annulment brought by Ryanair and Laudamotion, claiming that the Commission had not examined all the aid measures granted to the airlines of the Lufthansa Group or their interaction, was dismissed by the tenth enlarged chamber of the ECJ.

The court found that the Commission had sufficiently examined all aid measures granted to the airlines belonging to the Lufthansa Group, including AUA. The Commission ruled out the risk of overcompensation, as it had subjected all the measures adopted in favor of the Lufthansa Group to the deduction rule. Accordingly, the total aid granted by Germany was reduced by the aid granted by other states in favor of a specific airline (in this case, AUA), so that the total amount by which this group was favored remained the same.

The argument of the plaintiff parties that the Commission did not sufficiently take into account the interplay of the aid granted was also rejected. The ECJ concluded that, in view of the deduction rule applied to all measures adopted in favor of the Lufthansa Group, there was no risk that the loan of EUR 150 million granted to AUA would benefit another airline of the Lufthansa Group.

In the context of the Austrian aid, possible discrimination against other airlines (e.g. Ryanair) was also examined. The court found that Article 107(2)(b) TFEU does not impose an obligation on Member States to make good all the damage caused by an exceptional occurrence (COVID-19), so that they cannot be obliged to grant aid to all those affected by such damage. The aid granted to AUA is justified by its essential importance for Austrian air transport (market share 43%), as it is also proportionate in terms of remedying the damage resulting from these restrictions and does not go beyond what is necessary to achieve this objective.

ECJ - Press Release No. 125/21, 14.07.2021