The European Union General Court has overturned a European Commission decision to approve EUR321 million euros (USD344 million) in restructuring aid for German carrier Condor (DE, Frankfurt International).

Irish budget carrier Ryanair (FR, Dublin International) had contested the EC's July 2021 decision to approve the state aid to Condor without initiating a formal investigation procedure. On May 8, the Luxembourg-based court found that the decision had been inappropriate and that Ryanair had demonstrated sufficiently that the Commission should have had doubts, justifying an inquest.

"Having regard to the doubts that the Commission should have had as regards the compatibility of that aid with EU law, it should have initiated a formal investigation procedure," the court stated.

It found that the regulator should have questioned whether the aid complied with the requirement of burden sharing, ensuring the German state's reasonable share of future gains, saying: "There is nothing in the contested decision to suggest that the Commission ascertained whether the aid at issue had been granted on terms that would afford Germany a reasonable share of future gains in the value of Condor."

The objective of the state aid was to support the restructuring and continuation of Condor’s operations, resolving the difficulties it faced owing to the insolvency of its former parent Thomas Cook Group. In total, Berlin granted Condor EUR525 million (USD563 million) in state aid in 2021, including EUR204 million (USD218 million) for Covid-19 era damages and the EUR321 million in restructuring support.

Still, the court ruled that Ryanair could challenge the decision only to protect its procedural rights, but not on its merits. It said the budget carrier had failed to demonstrate that the aid would substantially harm its competitive position or that it was directly affected by the Commission's decision.

Condor acknowledged the judgment, underlining it had no impact on its business situation and flight operations. "The court ruled that the approval of the aid would have required an in-depth examination, which the Commission must now carry out," a spokeswoman said in a statement shared with ch-aviation. "The aid consisted of loans to continue Condor's flight operations even after Thomas Cook's insolvency because Condor's going concern prognosis was always positive, and Condor was in distress through no fault of its own. Condor was able to completely restructure itself through according proceedings." She said the airline would examine its further steps following the ruling in close cooperation with the responsible authorities.

A Ryanair spokesman described the court's decision as "a triumph for fair competition and consumers across the EU". He pointed out that the EU General Court had deemed billions in state aid to major European airlines unlawful, yet the Commission has not enforced recovery or implemented measures to address the damage to competition. He said the judgment underscored an urgent need for the authority to take action to rectify these breaches of EU law.

In a previous challenge before the EU General Court in 2019, Ryanair had lost a challenge over a six-month bridging loan to Condor shortly after Thomas Cook Group declared bankruptcy in 2019.