Ryanair Wins Court Challenge to State Aid for Rivals KLM and TAP

Ryanair Holdings (RYAAY) is pleased that the court has agreed with its contention that government financial support extended to Air France-KLM and TAP was unlawful.

After the COVID-19 pandemic struck, the Dutch government offered a 3.4 billion euro state aid package to Air France-KLM to help the national flag carrier ride out the pandemic crisis. Similarly, Portugal offered 1.2 billion euros to TAP. The European Commission approved the state subsidies to the airlines, but Ryanair argued that they were unfair. Ryanair challenged the decision in the EU (European Union) General Court, and the court has sided with the airline.

Ryanair argued that the Commission’s approval of the state aid to KLM and TAP was akin to encouraging unfair competition and rewarding inefficiency. It pointed out that the EU states have issued more than 30 billion euro in unfair subsidies to their national airlines, negating the progress made in creating a single market for air transportation across the EU.

“If Europe is to emerge from this crisis with a functioning single market, airlines must be allowed to compete on a level playing field,” Ryanair’s spokesperson said.

Ryanair is an Irish budget airline that primarily serves the European market. It recently launched a flash sale targeting U.K. holiday travelers with tickets from as low as 5 Sterling pounds for June flights to multiple destinations. (See Ryanair stock analysis on TipRanks)

Raymond James analyst Savanthi Syth reiterated a Buy rating on Ryanair stock and raised the price target to $135 from $120. Syth’s new price target suggests 19.02% upside potential.

Consensus among analysts on Wall Street is a Moderate Buy based on 1 Buy and 1 Hold ratings. The average analyst price target of $135 points to 19.02% upside potential from the current price.

RYAAY scores a 7 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock’s returns are likely to align with the market performance.

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