LOT Polish Latest To Face Aid Legal Action From Ryanair

LOT Polish Latest To Face Aid Legal Action From Ryanair

Ryanair is sticking to its habit of contesting state aid packages provided to European airlines. The latest complaint Ryanair made was to the European Court of Justice against LOT Polish Airlines, the national airline and flag carrier of Poland.

LOT Polish Airlines
LOT Polish Airlines received state aid from Poland, and Ryanair is challenging this. Photo: Getty Images

LOT Polish Airlines is the latest in a long line

As has become standard practice for Ryanair, this pan-European airline is contesting yet another package of state aid provided to a European national airline during the ongoing pandemic.

The latest airline under the spotlight is LOT Polish Airlines, for which Ryanair launched the appeal this month, July 2021.

LOT Polish received PLN 2.9 billion ($787 million) in state aid in December 2020. Two-thirds of that amount came in the form of a loan, and a third came in the form of a capital increase.

Speaking to Puls Biznesu, Juliusz Komorek, a board member of the Ryanair group, said (translated):

“We appealed to the General Court of the European Court of Justice against the decision in the LOT case, at the beginning of July. The case is pending. The next step will be the reaction of the European Commission and probably the intervention of Poland that will support it. I suspect that the entire process will not take place until 2022.”

LOT Polish Airlines Boeing 737-400
LOT Polish received PLN three billion. Photo: Getty Images

LOT Polish has already responded

An official from LOT Polish Airlines has already responded to this news, also speaking to Puls Biznesu. Krzysztof Moczulski, a spokesman for LOT, said:

“Ryanair accuses the European Commission, among other things, of misapplication of state aid rules, including of recapitalization as a support measure, instead of other, less market-distorting forms. It should be noted, however, that before adopting the decision, the Commission carefully analyzed the LOT case, the conditions of the aid provided, the necessity for it, and the appropriateness of the forms of support accepted.”

Why does LOT need state aid?

In 2019, LOT Polish carried just under 10,5 million passengers. In 2020, the number was just slightly over three million, representing a drop of over 70%.

The drop is particularly striking because LOT had extensive expansion plans for 2020, and it was projecting double-digit passenger growth from 2019 to 2020, so the actual damage to the airline as a result of the pandemic is in effect far greater than a 70% loss.

The airline made a loss of over a billion PLN ($260 million) in 2020

Ryanair Lufthansa
Ryanair continues to appeal state aid decisions. Photo: Getty Images

Ryanair continues to launch appeals

Ryanair launched 17 appeals against the European Commission so far, challenging the approval of multiple billions of euros that European governments have provided to their national airlines during COVID-19.

Two of these appeals have so far been successful: in May, the European Union’s General Court determined that state aid granted to Air France-KLM and TAP violated the rules. Still, the airlines have not been asked to repay the funds they received.

What do you think of Ryanair launching appeals against the provision of state aid for loss-making European national airlines? Let us know what you think of this story in the comments below.

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