The Court of First Instance dismisses the action brought by the competing airline Ryanair

The Court of First Instance has dismissed the action brought by Ryanair Limited against a Commission decision authorising the Irish Government to pay the second of three tranches of aid to the Aer Lingus group. The Irish Government was therefore entitled to pay that tranche of aid.

In 1993, the Commission had authorised the Irish Government to grant aid of IR £175 million to the Aer Lingus group in the context of a restructuring plan. The injection was to be made in three tranches: IR £75 million to be paid in 1993, IR £50 million in 1994 and IR £50 million in 1995. However the Commission's decision made provision of the aid subject to certain specific conditions in order for it to be regarded as compatible with the common market. In particular, payment of the second and third tranches of the aid was conditional on the Aer Lingus group reducing its costs by IR £50 million.

In December 1994 the Commission found that the Aer Lingus group had achieved a reduction in costs of only IR £42.4 million. It none the less authorised the Irish Government to pay the second tranche of the aid, acknowledging that the progress of the restructuring and the results already obtained were satisfactory, even though the specified objective had not been achieved in full.

Ryanair brought these proceedings in order to seek the annulment of that decision authorising the payment of the second tranche of the aid.

The Court of First Instance states that the effect of failure to comply with a condition imposed in a decision approving aid is that the subsequent tranches of the aid may then be paid only following a new decision by the Commission.

However the Commission enjoys a power to manage and monitor the implementation of aid payable in tranches. In the present case, in view, in particular, of the fact that the deviation from the condition in question was relatively minor (IR £42.4 million rather than IR £50 million) and that the Commission did not dispense Aer Lingus from compliance with that condition, but merely extended by one year the time-limit within which the IR £50 million reduction in costs was to be achieved, the Court of First Instance considers that the Commission did not depart from the scope of the 1993 Decision.

The Court of First Instance notes, inter alia, that the fact that the cost reduction objective was not achieved was due to circumstances which could not have been foreseen at the time of the initial decision, in particular, a social conflict which arose within the maintenance subsidiary, Team Aer Lingus.

Furthermore, Ryanair has not established that the developments in Aer Lingus' activities raised doubts as to the compatibility of the aid with the requirements of the common market. Moreover, the Court of First Instance does not discern any failure to state the reasons for the contested decision.

The application is therefore dismissed.

N.B.: an appeal against the decision of the Court of First Instance, on points of law only, may be lodged before the Court of Justice of the European Communities within two months of its notification.