Ryanair (FR, Dublin International) has lost another attempt to halt European Union approval of state aid to Finnair (AY, Helsinki Vantaa), after Europe’s Luxembourg-based General Court said it had dismissed its action in its entirety.

In June 2020, as the coronavirus pandemic wreaked havoc on every airline, the European Commission cleared the Finnish government’s plans to contribute to the flag carrier’s recapitalisation by subscribing to new shares in a rights issue to the tune of EUR286 million euros (USD326 million at the time).

The antitrust regulator had justified this by saying: “Finnair ensures the essential domestic and international connectivity needs of Finland. Given the geographical location of the country, the national economy, many jobs, and the development of foreign trade rely on these services.”

Ryanair launched legal action against the commission on the grounds that it had neglected to initiate a formal investigation into the aid despite doubts it should have had about the compatibility of the aid with the rules of the EU’s internal market. According to the low-cost carrier, the commission had infringed the principles of equal treatment.

However, Europe’s second-highest court took the side of the competition regulators.

“The commission was entitled to approve the recapitalisation of Finnair, carried out by its public and private owners on a pro rata basis in proportion to the previously existing ownership structure, without initiating the formal investigation procedure,” the June 22 ruling summarised.

The bloc had adopted a temporary framework loosening its rules on state aid a few days after the start of member countries’ first lockdown measures, “in order to allow those states to act with the urgency that the situation demanded,” it pointed out. The court added that the new shares had been “offered at a sufficiently large price discount for the view to be taken that Finland has received sufficient remuneration.” Further, the measure sought “as far as possible to maintain the entirety of Finnair’s operations and did not target particular routes.”

The judgement came after Ryanair lost a separate challenge in April 2021 against a Finnish state loan guarantee for Finnair. But it has won cases against Dutch assistance handed to KLM Royal Dutch Airlines and Portuguese support for TAP Air Portugal - though it has lost appeals against aid for Austrian Airlines, Condor, and SAS Scandinavian Airlines. With this latest ruling, it now has the option of lodging an appeal with Europe’s highest court, the Court of Justice of the European Union.

Approached for comment, a Ryanair spokesperson told ch-aviation that “while the Covid-19 crisis has caused damage to all airlines that contribute to the economy and the connectivity of Finland, the Finnish government decided to support only its flag carrier. One of the EU’s greatest achievements is the creation of a true single market for air transport. The European Commission’s approval of the Finnish recapitalisation aid to Finnair went against the fundamental principles of EU law. Today’s judgement sets the process of liberalisation in air transport back by 30 years by allowing Finland to give its national flag carrier a leg up over more efficient competitors, based purely on nationality.”

Finnair did not immediately respond to ch-aviation’s request for comment.