On 25 June 2025, the General Court, in case T‑366/22, Ryanair v Commission, dismissed the action brought by Ryanair seeking the annulment of Commission decision SA.56867.[1] That decision authorised compensation under Article 107(2)(b) TFEU for damage suffered by the German airline Condor as a result of the covid-19 pandemic. However, Condor had been in financial trouble long before the outbreak of the pandemic. Its financial problems started with the bankruptcy of Thomas Cook, its parent company. Condor had requested and received restructuring aid and also other aid to compensate for covid-19 related damage. The General Court had to determine whether the Commission had disentangled the harm wreaked by the pandemic from the harm caused by other problems.
The aid measures in favour of Condor over the past 5-6 years were as follows:
- October 2019: Rescue aid in the form of a loan of EUR 380 million [55394]. The Ryanair appeal against that aid was dismissed by the General Court in May 2022 [T-577/20, Ryanair v Commission].
- April 2020: Compensation for damage caused by covid-19 in the form of two loans totalling EUR 550 million [56867]. The Ryanair appeal against that aid was upheld by the General Court in June 2021 [T-665/20, Ryanair v Commission]. The General Court found that the Commission did not distinguish sufficiently between the damage caused by covid-19 and the earlier financial difficulties of Condor. The Commission readopted that decision in July 2021 and corrected the errors identified by the Court. Ryanair challenged the revised decision in which resulted in the judgment that is reviewed in this article.
- July 2021: Compensation for damage caused by covid-19 [63617].
- July 2021: Restructuring aid [63203]. The Ryanair appeal was upheld by the General Court in May 2024 [T-28/22, Ryanair v Commission]. The General Court held that the Commission should have had doubts as to whether the aid satisfied the requirement of adequate burden sharing as stipulated in point 67 of the Rescue & Restructuring Aid Guidelines [R&R]. The Commission reopened the case and adopted a revised decision in April 2025. An appeal by Condor against Ryanair is still pending before the Court of Justice in case C-505/24 P.
Given the multiplicity of the aid measures and the variety of causes of damage suffered by Condor, the task of the Commission to determine the amount of aid allowed under Article 107(2)(b) TFEU was not easy. The difficulty was compounded by the fact that Germany had calculated an ex ante amount of expected damage for the whole of 2020 just when the pandemic broke out in March 2020. Normally, damage is calculated ex post. The damage was estimated as the difference between the business plan of Condor in February 2020 and the expected financial outcome by the end of December 2020. Two compensation periods were taken into account, depending on the severity of the disruption of air travel: 17 March – 30 June (first compensation period) and 1 July – 31 December (second compensation period).
Compensation for damage: Principles
In the present case [T‑366/22], the General Court, first, recalled that “(50) Article 107(2)(b) TFEU provides that aid to make good the damage caused by natural disasters or exceptional occurrences is compatible with the internal market. Aid that fulfils the three conditions set out in Article 107(2)(b) TFEU (a natural disaster or an exceptional occurrence has taken place, there is a direct link between the damage to be compensated and the exceptional occurrence and the aid is proportional to the damage caused by the exceptional occurrence) must be declared compatible with the internal market”.
Since Condor had also financial difficulties caused by the bankruptcy of Thomas Cook, the Court also clarified that “(51) the FEU Treaty does not preclude a concurrent application of Article 107(2)(b) and Article 107(3)(c) TFEU, provided that the conditions of each of those two provisions are met. Accordingly, there is nothing to prevent the beneficiary of aid under Article 107(2)(b) TFEU from being an undertaking in difficulty”.
“(53) However, the occurrence giving rise to the damage, as defined in the contested decision, must be the determining cause of the damage which the aid at issue is intended to remedy and must be directly responsible for causing it. A direct link exists only where the damage is the direct consequence of the occurrence in question and does not depend on the interposition of other causes. Accordingly, it is incumbent on the Commission to examine with particular care whether the occurrence was really the decisive cause of the damage suffered by the beneficiary of the aid concerned or, on the contrary, some of the damage suffered was due to the beneficiary’s pre-existing difficulties”.
Please note that the General Court uses three different descriptors of the source of the damage in paragraph 53: “determining cause”, “directly responsible” and “decisive cause”. Perhaps they were considered as synonyms and were used to dispel doubt as to the nature of the causality between the exceptional occurrence and the damage. However, the first sentence of that paragraph does not use the conjunctive “or”. Instead it uses “and”, which raises the question of what “directly responsible” adds to “determining cause”. Perhaps the General Court meant that an event is the “determining cause” when it is capable of causing the damage at issue and it is “directly responsible” when it has actually caused the damage.
How to measure damage: EBT v EBITDA
Ryanair contended that the Commission was wrong to use EBT instead of EBITDA to measure the extent of the damage suffered by Condor. EBT is a measure of financial performance that tracks revenue minus expenses excluding tax. EBITDA excludes not only tax, but also depreciation, amortisation and interest costs. The Commission argued that both measures are used by the financial community so that it was not required to prefer one over the other.
The General Court examined whether the Commission should not have used EBT in this case.
First, the General Court noted that “(66) the Commission decided not to base the counterfactual scenario on Condor’s results in 2019 because those results were affected by the insolvency of Thomas Cook”.
Second, the General Court considered that Ryanair’s contention that EBT could better reflect cost items which increased in 2020 compared to those recorded in 2019 was speculative, and not based on tangible evidence. [paragraph 67 of the judgment]
“(68) Moreover, in the present case, it is common ground that EBT was used uniformly to measure Condor’s performance in both the factual and the counterfactual scenario, with the result that the costs related to interest, depreciation and amortisation were taken into account in both scenarios.”
“(69) In any event, […], the Commission did indeed assess Condor’s financial results both on the basis of EBITDA and on the basis of EBT, as regards the first compensation period. This shows a difference of EUR 0.7 million, depending on the metric used.”
“(70) The damage caused to Condor by the travel restrictions and other containment measures, amounting to EUR 175.355 million, exceeds the amount of the aid element, which amounts to EUR 144.1 million, by EUR 31.255 million. Therefore, a difference of EUR 0.7 million in the quantification of the damage, depending on whether it is calculated on the basis of EBT or EBITDA, in no way alters the fact that the amount of the damage far exceeds the amount of the aid element, with the result that no overcompensation can result from that difference irrespective of the metric used.”
Covid-19 damage v other difficulties
Ryanair submitted that the Commission failed to distinguish between the damage caused by the imposition of travel restrictions and losses due to Condor’s pre-existing difficulties.
“(91) It should be noted, as the Commission did, that, in the circumstances of the present case, characterised by the fact that the beneficiary experienced drastic changes brought about by the bankruptcy of its parent company and the termination of its membership of the Thomas Cook group during the year preceding the outbreak of the COVID-19 pandemic, the 2020 business plan could be used as a basis for the counterfactual scenario. In addition, the Commission rightly submits that the analysis for calculating the damage suffered by Condor consists of examining its situation just before the occurrence of that pandemic, in order to determine the results that it could have achieved in the absence of that pandemic, with the result that data dating back several years are not directly relevant in that regard. Accordingly, the applicant’s arguments to that effect must be rejected.”
“(129) In the present case, […], the counterfactual scenario for the second compensation period was based on the number of passengers on flights not affected by the travel restrictions implemented during the period from 1 July to 31 October 2020. As regards the period from 1 November to 31 December 2020, the Commission explained that it was not possible to identify a sufficient number of flights on routes for which no travel restriction was in force.”
“(130) It follows that, between 1 November and 31 December 2020, almost all of the routes operated by Condor were affected by travel restrictions, with the result that the data relating to that period were not sufficiently representative of the number of passengers who would have travelled in the absence of those restrictions. Accordingly, in order to take into account a sufficiently representative sample of flights not affected by those restrictions, the Commission could, without having any doubts, base its assessment on the flights operated between 1 July and 31 October 2020.”
“(133) It is sufficient to note that the method adopted by the Commission […] was specifically intended to exclude the number of passengers who would not have taken the flight even in the absence of the travel restrictions, since they were deterred for other reasons indirectly linked to the COVID-19 pandemic, such as the general state of concern associated with journeys made in a volatile health context of a pandemic. The causal link between the damage caused by the loss of revenue resulting from the decision of those passengers not to travel and the travel restrictions is only indirect. That method is therefore precisely intended to ensure the direct link between the damage and the travel restrictions linked to that pandemic. However, for that method to be reliable, it must be based on a sufficiently representative sample of flights not affected by such restrictions.”
I find the reasoning of the General Court in paragraphs 130 & 133 pretty questionable. First, with respect to paragraph 130, the counterfactual is always the situation of the aid recipient in a period which is as close as possible to the period in which the damage occurs. In the case at hand, the two periods were different. Second, causality can be both direct and indirect. Event A causes C or event A causes B that, in turn, causes C. The Court appears to believe that indirect causality can be caused by multiple factors and ignores the possibility of a chain of events.
Did Condor do enough to mitigate its costs?
Ryanair argued that the Commission failed to verify whether Condor had taken reasonable measures to limit the extent of the damage it suffered. Although the Commission took into account Condor’s actual avoided costs, according to Ryanair, it did not take into account all the costs that could be potentially avoided.
“(140) In the present case, […], in order to avoid overcompensation, the Commission deducted from the damage suffered by Condor the costs which Condor avoided as a result of the travel restrictions linked to the COVID-19 pandemic. Accordingly, the assessment of the damage takes account, […], both of the additional costs caused by those restrictions and of the costs avoided as a result of those restrictions. In that regard, the Commission assessed both the positive and negative impact of those restrictions on Condor’s variable costs, in particular fuel costs, fees and charges, maintenance costs, IATA commissions and fixed costs, in particular the reduction of staff and marketing costs, and the costs related to the grounding of aircraft.”
“(141) The Commission defined the avoided costs as those that Condor would have incurred during the relevant period if its activities had not been affected by the travel restrictions and containment measures linked to the COVID-19 pandemic and which Condor would not have had to bear because of those restrictions.”
“(143) Only aid that is in excess of the damage incurred by its beneficiaries does not fall within the scope of Article 107(2)(b) TFEU. Although the measure at issue must not bring about an improvement in Condor’s financial situation going beyond what is necessary to attain the aim provided for in Article 107(2)(b) TFEU, that provision does not require a ‘maximum mitigation of costs’ by the beneficiary”.
All damage can be compensated except where the beneficiary could have reasonably and foreseeably avoided damage or where the damage was caused by the negligence of the beneficiary.
Underestimation of the true amount of the aid
Ryanair claimed that the Commission underestimated the amount of the aid in the loans that were provided to Condor.
“(156) In the present case, […], the Commission acknowledged that repayment of the loans was risky, since it depended heavily on the timing and price of the sale of Condor and the cash flows generated. In that regard, it found that the amount of aid had to be assessed on the basis of the assumption that Condor would be sold in mid-2022. It split its assessment into tranches, taking into consideration the different seniority of loan 2 and tranches A and B of loan 1 and stating that, in the event of sale, loan 2 would be repaid first, followed by tranche A of loan 1 and then by tranche B of loan 1.”
The General Court does not comment on whether those assumptions were reasonable.
“(157) Next, the Commission stated that a sale price similar to that obtained in January 2020 would be sufficient to repay tranche A of loan 1, and loan 2, and would also ensure a buffer of several million euro. According to the Commission, it was realistic to expect that Condor’s sale price in mid-2022 would be similar to that obtained in January 2020 on the ground, first, that the price obtained in January 2020 had been obtained within a short time frame of six months, in the context of an open tender procedure and, second, that that price had been offered for an undertaking in insolvency proceedings. However, at the time of the new sale, the process would be longer and Condor would have left the insolvency proceedings. Thus, it considered that the probability of repayment of loan 2 and of tranche A of loan 1 could be regarded as sufficiently high, with the result that it determined the aid element as being the amount corresponding to a 1000 basis point IBOR rate, namely the rate provided for an undertaking with low collateral and in poor financial condition. That amount corresponded, in its view, to the highest rate provided for in its Communication on the revision of the method for setting the reference and discount rates (OJ 2008 C 14, p. 6). As regards tranche B of loan 1, the aid element was set as the nominal amount of the loan on account of the fact that it had low seniority and that it was unlikely that the sale price of Condor would be sufficient to cover it.”
“(160) The Commission was therefore required to carry out a prospective analysis that was necessarily based on assumptions.” “(161) In that regard, the Commission took account of a body of coherent and consistent evidence capable of indicating that the assumptions envisaged were plausible.”
“(162) First, as the Commission found […] Condor was, taken individually, a sound and viable undertaking whose difficulties were linked to those of its parent company and were therefore not intrinsic to it. The Commission could therefore expect the investors to express an interest in its purchase.”
“(163) Second, as the Commission correctly points out in the contested decision, at the time of the attempted sale in 2020 Condor was in insolvency proceedings and the period for the sale was short. By contrast, the new sales process, planned for 2022, would take place over a longer period of time and Condor would then have left the insolvency proceedings.”
“(164) Third, […] the prospect of a sale of Condor at a price similar to that obtained in January 2020 would make it possible not only to repay loan 2 and tranche A of loan 1, but also to ensure an additional buffer of several million euro. Accordingly, the prospect of that repayment would remain plausible even if the sale price had been lower than that obtained in January 2020.”
“(165) Fourth, it is also apparent from the contested decision that there were collaterals for tranches A and B of loan 1 and that those collaterals would be used first for tranche A and then for tranche B.”
“(166) On the basis of that body of evidence, the Commission could, without having any doubts, consider that the prospect of selling Condor in mid-2022 at a price sufficient to repay loan 2 and tranche A of loan 1 was plausible and that, therefore, the amount of the aid had to be calculated on the basis of a 1000 basis points IBOR interest rate on those loans.”
Risk of double compensation arising from the cumulation of the aid at hand with rescue aid
Ryanair alleged that the Commission failed to take into consideration the rescue aid previously granted to Condor, which covered a period of six months from 16 September 2019 to 3 April 2020, and which therefore overlapped in part with the first compensation period, namely between 17 March and 3 April 2020.
“(175) The FEU Treaty does not preclude a concurrent application of Article 107(2)(b) and Article 107(3)(c) TFEU, provided that the conditions of each of those two provisions are met.”
“(177-178) When the Commission examines the compatibility of State aid with the internal market, it must take account of all the relevant factors in the case in question […] It is therefore necessary to examine whether the rescue aid was a relevant factor for the assessment of the compatibility of the measure at issue with the internal market.”
“(179) In that regard, it should be noted that the rescue aid and the measure at issue had different purposes and pursued different objectives, with the result that they were intended to cover different costs. The objective of that measure was to compensate Condor for the damage suffered as a result of travel restrictions or containment measures adopted in response to the COVID-19 pandemic, that damage having been calculated in accordance with the method described in paragraphs 56 and 57 above. By contrast, the rescue aid, granted before the outbreak of that pandemic, had a completely different purpose and objective, namely to provide the latter with the liquidity it needed to cover its operating costs and to ensure its survival following the insolvency of Thomas Cook for a limited period of six months during which it had to prepare for its restructuring.”
“(180) Accordingly, the applicant has not demonstrated, with supporting evidence, that the rescue aid had an actual impact on the calculation of the damage which the measure at issue was intended to compensate. In particular, it has failed to demonstrate specifically what costs were compensated twice by both the rescue aid and that measure, with the result that it should have been excluded from the amount of the damages granted by that measure. The mere fact that there is a slight overlap between the period covered by the rescue aid and the first compensation period is not sufficient to demonstrate that the Commission should have had doubts as to the existence of a risk of double compensation, since those two aid measures are intended to cover costs of different origin.”
Conclusions
Ryanair also claimed breach of the general principles of non-discrimination, proportionality, freedom to provide services and freedom of establishment. The General Court rejected all those claims. Since it had dismissed all the previous pleas of Ryanair, it dismissed the action in its entirety.
[1] The full text of the judgment can be accessed at:
