Ryanair has today won its challenge against state aid granted to German charter airline Condor, a third victory in its fight against billions of euros in pandemic support granted to its rivals.

The Luxembourg-based General Court annulled regulators' decision approving the measure.

But it said Condor would not be required to repay the aid for now due to the Covid-19 pandemic and pending a new decision by the European Commission.

"The General Court annuls the Commission decision approving the state aid granted by Germany to the airline Condor Flugdienst on the ground of an inadequate statement of reasons," Europe's second-top court said.

Judges said the EU competition enforcer had provided inadequate reasons regarding the direct causal link between the costs resulting from the extension of Condor's insolvency period and the cancellation and rescheduling of its flights as a result of travel restrictions related to the pandemic.

The EU executive last year cleared a €550m German state-guaranteed loan to Condor, a former unit of collapsed holiday company Thomas Cook which operated a fleet of more than 50 aircraft before the pandemic.

It said the measure complied with the bloc's state aid rules.

Ryanair hailed today's judgment.

"If Europe is to emerge from this crisis with a functioning single market, the European Commission must stand up to national governments and stop rubberstamping discriminatory State aid to inefficient national airlines," Europe's biggest budget airline said in a statement.

The Commission said it would study the judgment before taking the next steps.

Condor, in which investment fund Attestor has acquired a 51% stake from the German state, said the ruling would not affect the company for now.

"Today's decision of the European court has no impact on the entry of Attestor as new majority owner of Condor. As the ruling suspends the implementation, it has no impact on Condor's liquidity," the company said in a statement.

The German government said the Commission's decision could be fixed relatively quickly as it was only the reasoning which was found to be wrong.

Ryanair, which has filed 16 lawsuits against the Commission for allowing state aid to Lufthansa, Air France KLM and other rivals as well as national schemes benefiting flag carriers, scored its first victories last month when the same court rejected aid given to KLM and Portugal's TAP.

The German government said the Commission's decision could be fixed relatively quickly as it was only the reasoning which was found to be wrong.

Ryanair, which has filed 16 lawsuits against the Commission for allowing state aid to Lufthansa, Air France KLM and other rivals as well as national schemes benefiting flag carriers, scored its first victories last month when the same court rejected aid given to KLM and Portugal's TAP.

UK launches action against Ryanair and BA over refunds

Meanwhile, the UK competition authority said today it was investigating whether Ryanair and British Airways had broken consumer law by failing to offer refunds for flights customers could not legally take during the Covid pandemic.

During periods of lockdown across Britain, the airlines refused to give refunds to people that were lawfully unable to fly.

IAG-owned British Airways had offered vouchers or rebooking and Ryanair had provided the option to rebook.

The Competition and Markets Authority (CMA) said the airlines may have breached consumer law and it had opened enforcement cases against them.

"While we understand that airlines have had a tough time during the pandemic, people should not be left unfairly out of pocket for following the law," CMA chief executive Andrea Coscelli said.

"Customers booked these flights in good faith and were legally unable to take them due to circumstances entirely outside of their control. We believe these people should have been offered their money back," he added.

The CMA said it had written to both airlines and was seeking to resolve it concerns with the companies, which may include refunds, or other redress, for affected customers.

Ryanair said it welcomed the CMA's update on its review of airline policies on refund requests made by UK consumers whose flights operated during periods of lockdown.

"Ryanair has approached such refund requests on a case by case basis and has paid refunds in justified cases," it said.

"Since June 2020, all our customers have also had the ability to rebook their flights without paying a change fee and millions of our UK customers have availed of this option," the airline added.

British Airways said it had acted lawfully at all times.

"It is incredible that the government is seeking to punish further an industry that is on its knees, after prohibiting airlines from meaningful flying for well over a year now," it said by email, saying any action taken against the industry threatened to destabilise it.

Both airlines said they had offered their customers flexible booking policies and British Airways said it had issued more than 3 million refunds since the beginning of the pandemic.

The watchdog's enforcement action could lead to court proceedings if a company persistently fails to comply with the its directives.

Ryanair shares were higher in Dublin trade today.