The European Commission is likely to tell Ryanair that it will have to repay between €3 million and €4 million in subsidies and supports to the Belgian regional government that runs Charleroi Airport.
The Irish Times learned last night that EU Transport Commissioner Ms Loyola De Palacio is likely to value the supports that Charleroi has given Ryanair at between €9 million and €10 million over the last three years.
However, it is understood she will order that only a portion of that figure, between €3 million to €4 million, should actually be repaid. Ms De Palacio's report is due on Tuesday and it broadly favours the principle of state airport authorities offering transparent discounts and supports to new operators and routes for up to three years.
The commissioner has found that many elements of the deal between the Walloon regional government, which owns Charleroi Airport, and Ryanair, are in line with this. However, she argues that some elements of the deal, including landing charge discounts, breach EU rules on state aid to private industry. This is because they apply only to Ryanair and the charging structure is not transparent. Thus, the airline will have to repay a proportion of the total value.
The €3-€4 million estimate of the likely repayment demand is well below what some analysts predicted earlier. Their forecasts generally came in at €10-€13 million. The airline itself claimed the figure might be €5 million. Speculation over the final cost and its first profit warning for seven years kept it in the headlines this week. On Wednesday, a selling spree of its stock wiped €1.3 billion off its value.
Significantly for Ryanair's efforts to control its future cost base, under the decision even those supports which the commissioner believes to be legal will have to end this year. Its agreement with the Walloon government is for 15 years.
However, some sources last night suggested that the airline could still benefit from low landing charges at the airport, if Charleroi agrees to offer the same cuts to all other existing and potential operators. It is understood that the Walloon government is considering doing this. One Irish analyst said that "things may not change very much at Charleroi" for the airline as a result of the process.
The airline is also likely to encounter some change in charges for baggage handling and related services. Charleroi is effectively providing these to Ryanair at a loss. However, under EU transport regulations, once the airport is processing more than two million passengers a year, it has to put its ground-handling service out to tender.
It is currently handling around 1.75 million, and is expected to pass the two million threshold within a year. This will oblige it to put the service out to tender, and it is not known how this will impact on ground handling costs at the airport at this stage.
The report addresses a range of issues, and establishes guidelines for airport-airline agreements on landing and other charges. The Commissioner is due to publish it on Tuesday.
Sources said that Ms De Palacio has made every effort to ensure that the document is legally airtight, as Ryanair has already signalled that it could challenge its findings in the European Court of Justice. Its competitors may also take up cudgels on the basis that the document and its findings do not go far enough.
In Dublin yesterday Ryanair gained two cents to close at €4.87 after nine million shares changed hands. London warmed to the airline slightly with almost eight million shares sold, leaving it 10 cents or 2 per cent ahead at €4.95. The stock was also supported in late afternoon trade in New York.
