The European Court of Justice has torn up its earlier support for the €3.4 billion credit package supplied by the Dutch government to KLM during the coronavirus pandemic.

The case was taken to court by budget airline Ryanair which said the support was unfair competition. This was the third hearing in the case since the European Commission approved the bailout in 2000.

The court has now ruled on appeal that KLM’s sister airline Air France and the holding company Air France KLM indirectly benefited from the funding but were not officially regarded as beneficiaries. The original approval for the funding was, therefore, an error, the EU court said.

KLM, which has paid back its loans, said in a reaction that it would study the ruling. The court made a similar ruling in relation to Air France several weeks ago.

Ryanair welcomed the court decision and urged the European Commission to “impose adequate remedies to repair at least some of the damage to competition done by this massive state bailout.”