The General Court annuls the Commission’s decision to approve the Netherlands financial aid for the airline KLM amid the COVID-19 pandemic on the grounds of inadequate reasoning

(Source: Court of Justice of the EU)

However, due to the particularly damaging impact of the pandemic on the Netherlands economy, the General Court suspends the effects of the annulment pending the adoption of a new decision by the Commission.

In June 2020,the Netherlands notified the European Commission of State aid for the airline KLM, a subsidiary of the Air France-KLM holding company. The notified aid, with a total budget of €3.4 billion, consisted, first, of a State guarantee for a loan to be granted by a consortium of banks and, secondly, a State loan. By that measure, the Netherlands intended to provide temporary liquidity needed by KLM to deal with the adverse effects of the COVID-19 pandemic. Bearing in mind KLM’s importance for the country’s economy and air transport connectivity, the Netherlands considered that the company’s failure would have exacerbated the serious disturbance in its economy caused by that pandemic.

On 4 May 2020 the Commission had already declared individual aid granted by France to Air France, another subsidiary of the Air France-KLM holding company, in the form of a State guarantee and a shareholder loan, totalling €7 billion, to be compatible with the internal market.1That aid measure was intended to finance Air France’s immediate liquidity needs.

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