The EU’s second-highest court has ruled that government bailouts of SAS and Lufthansa early in the pandemic were illegal, even though they were approved by the European Commission, the EU’s executive body.
Lufthansa has repaid its €6 billion obligation to the German government, but SAS, which has been on shaky ground and skirting bankruptcy has not yet repaid the €1.1 billion it received from Denmark and Sweden; if forced to repay the loans now, it could possibly tip the airline over the edge.
The European General Court’s ruling says that the Commission, before approving the loans by the governments, should have first considered whether funds could have been borrowed from private lenders, what incentives would ensure payback of the money, and the effects on airline competition. Both cases were based on complaints filed by budget carrier Ryanair, which got no bailout funds from any government.
