Transport: Decision on second tranche for Aer Lingus 2

United Kingdom

Despite Ryanair's trenchant campaign to overturn the decision to allow the second instalment of £IR 175 million of state aid for Ireland's national flag carrier Aer Lingus agreed back in 1993, the Court of First Instance upheld the original approval decision. The original package was to finance Aer Lingus's restructuring plan, and the payments were to be made in three instalments to ensure the airline made a proper job of its reorganisation. The Commission's decision in December 1994 to clear the second tranche, despite Aer Lingus being slightly off target in cost cutting programme, triggered Ryanair's challenge in the European Court.

The Court of First Instance judges observed that Aer Lingus had not been far off its target (£IR42.4 instead of £IR50 million) and the failure to reduce costs to the full amount had been due to circumstances largely out of its control, such as industrial action. Since Ryanair had no evidence to show that Aer Lingus' activities had called into question the compatibility of the state aid with the Common Market, its case was rejected.