Judgment of the Court of First Instance (Second Chamber, extended composition) of 25 June 1998. - British Airways plc, Scandinavian Airlines System Denmark-Norway-Sweden, Koninklijke Luchtvaart Maatschappij NV, Air UK Ltd, Euralair international, TAT European Airlines SA and British Midland Airways Ltd v Commission of the European Communities. - State aid - Air transport - Airline company in a critical financial situation - Authorisation for an increase in capital. - Joined cases T-371/94 and T-394/94.



European Court reports 1998 Page II-02405



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

1 State aid - Planned aid - Examination by the Commission - Inter partes procedure - Rights of concerned parties to participate and to be informed - Restricted - Not at variance with the Commission's obligation to provide reasons for its decision which address the essential complaints raised by concerned parties

(EC Treaty, Arts 93(2), 190 and 214)

2 State aid - Planned aid - Examination by the Commission - Obligation to comply with a fixed period - No such obligation - Obligation to seek assistance from external experts - No such obligation

(EC Treaty, Art. 93(2))

3 Procedure - Intervention - Plea in law not raised by the applicant - Inadmissible

(EC Statute of the Court of Justice, Art. 37, fourth para.; Rules of Procedure of the Court of First Instance, Art. 116(3))

4 State aid - Planned aid - Examination by the Commission - Obligation to forward to the other Member States observations received from the Government of the State seeking authorisation to grant aid - No such obligation

(EC Treaty, Art. 93)

5 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Discretion of the Commission - Judicial review - Limits - Assessment of legality on the basis of the information available when the decision was adopted

(EC Treaty, Arts 92(3) and 173)

6 Acts of the institutions - Statement of reasons - Obligation - Scope - Commission decision authorising State aid

(EC Treaty, Arts 93(2), 173 and 190)

7 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Discretion of the Commission

(EC Treaty, Art. 92(3))

8 Commission - Principle of collegiate responsibility - Scope - Statement of reasons for a decision - Amendment following adoption - Unlawful

(EC Treaty, Art. 190; Merger Treaty, Art. 17)

9 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Examination of the restructuring measures envisaged by the undertaking receiving the aid - Comparison with the measures adopted by other undertakings in the same sector - Not relevant

(EC Treaty, Art. 92(3))

10 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Aid intended for the development of a sector of economic activity - Restructuring of one of the three largest European airline companies

(EC Treaty, Art. 92(3)(c))

11 Acts of the institutions - Statement of reasons - Obligation - Scope - Commission decision on whether aid is compatible with the common market

(EC Treaty, Art. 92(1) and (3) and Art. 190)

12 State aid - Prohibition - Derogations - Aid which may be regarded as compatible with the common market - Discretion of the Commission - Reference to the Community context - Competence to attach conditions to the decision authorising the aid - Legal and practical utility of those conditions - Non-compliance with the conditions - No bearing on the lawfulness of the decision

(EC Treaty, Art. 92(3)(c))

13 Actions for annulment - Pleas in law - Plea alleging infringement of Article 155 of the Treaty - Inadmissible

(EC Treaty, Arts 155 and 173)

Summary

1 Far from enjoying the same rights to a fair hearing as those which individuals against whom a procedure has been instituted are recognised as having, concerned parties, within the meaning of Article 93(2) of the Treaty, have only the right to be involved in the administrative procedure to the extent appropriate in the light of the circumstances of the case.

There may be two reasons for restricting the extent of the right to participate and to be informed which such parties enjoy. First, where a Member State notifies the Commission of planned aid and submits supporting documentation, and the relevant Commission departments subsequently hold a series of meetings with officials from the Member State in question, the amount of information in the Commission's possession may already be relatively extensive, leaving outstanding only a small number of doubts which information supplied by the parties concerned may dispel. In so far as they relate to the details of the planned aid, to the economic, financial and competitive position of the recipient undertaking and to its internal operations, the discussions between the Member State and the Commission will inevitably be more thorough than those conducted with the parties concerned. While providing such parties with general information on the essentials of the planned aid, therefore, the Commission may confine itself to concentrating its communication in the Official Journal on those aspects of the planned aid concerning which it still harbours doubts. Second, the Commission is required, under Article 214 of the Treaty, not to disclose to interested parties information of the kind covered by the obligation of professional secrecy, in particular information relating to the internal operations of the recipient undertaking.

The limited nature of the rights of concerned parties to participate and to be informed, in so far as they relate solely to the administrative procedure, is not at variance with the Commission's duty under Article 190 of the Treaty to provide, in its final decision authorising planned aid, sufficient reasons which must address all the essential complaints which parties directly and individually concerned by that decision have made either on their own initiative or as a result of information supplied by the Commission. Thus, even on the assumption that the Commission may validly prefer to use other sources of information and thereby reduce the significance of the participation of concerned parties, it is not thereby released from its obligation to include an adequate statement of reasons in its decision.

2 There is nothing in the Treaty or in Community legislation requiring decisions on State aid adopted at the conclusion of the procedure under Article 93(2) of the Treaty to comply with a fixed period. On the assumption that the Commission acted with excessive haste and did not give itself sufficient time to examine proposed aid, such conduct could not, by itself, justify annulment of the decision authorising that aid. To entail annulment, such conduct would have to involve a breach of specific rules governing procedure, the duty to provide reasons or the internal legality of the decision in question.

Nor is there anything in the Treaty or in Community legislation which requires the Commission to seek assistance from external experts in order to draft a decision relating to State aid.

3 In view of the fact that interveners must, under Article 116(3) of the Rules of Procedure of the Court of First Instance, accept the case as they find it at the time of their intervention and that their submissions in an application to intervene are, under the fourth paragraph of Article 37 of the EC Statute of the Court of Justice, limited to supporting the submissions of one of the main parties, an intervener is not entitled to raise a plea in law that was not raised by the applicant.

4 The text of Article 93 of the Treaty does not require the Commission to forward to the other Member States observations which it has received from the Government of the State seeking authorisation to grant aid. On the contrary, it follows from the third subparagraph of Article 93(2) of the Treaty that the other Member States may be involved in a specific case of aid only where that case has, at the request of the State concerned, been submitted to the Council.

5 The Commission enjoys a broad discretion in the application of Article 92(3) of the Treaty. Since that discretion involves complex economic and social appraisals, the Court must, in reviewing a decision adopted in that context, confine itself to verifying whether the Commission complied with the rules governing procedure and the statement of reasons, whether the facts on which the contested finding was based have been accurately stated and whether there has been any manifest error in the assessment of those facts or misuse of powers.

In that regard, in the context of an action for annulment under Article 173 of the Treaty, the legality of a Community measure falls to be assessed on the basis of the elements of fact and of law existing at the time when the measure was adopted and cannot depend on retrospective considerations as to its efficacy. In particular, the complex assessments made by the Commission must be examined solely on the basis of the information available to the Commission at the time when those assessments were made.

6 The statement of reasons required by Article 190 of the Treaty must disclose in a clear and unequivocal fashion the reasoning followed by the Community authority which adopted the contested measure in such a way as to make the persons concerned aware of the reasons for the measure and thus enable them to defend their rights and the Community judicature to exercise its supervisory jurisdiction. The question whether the statement of the grounds for a decision meets the requirements of Article 190 of the Treaty must be assessed with regard not only to its wording but also to its context and all the legal rules governing the matter in question. While the Commission, in the statement of reasons for a decision, is not required to discuss all the issues of fact and law raised by interested parties during the administrative procedure, it must none the less take account of all the circumstances and all the relevant factors of the case in question.

In regard to a decision authorising State aid, the persons, undertakings or associations whose interests might be affected by the grant of the aid, in particular competing undertakings and trade associations, are to be regarded as concerned parties within the meaning of Article 93(2) of the Treaty and considered, in that capacity, to be directly and individually concerned by that decision.

Since the requirement of a statement of reasons must be assessed on the basis, in particular, of the interest which those to whom the measure is addressed or other parties to whom it is of direct and individual concern, within the meaning of Article 173 of the Treaty, may have in receiving explanations, it cannot be determined solely on the basis of the interest which the Member State to which that decision is addressed may have in obtaining information. Where a Member State has obtained from the Commission that which it was seeking, namely authorisation for its planned aid, its interest in having a reasoned decision addressed to it may be greatly reduced, in contrast to that of competitors of the beneficiary of the aid, in particular where it has received sufficient information during the negotiations with the Commission through, inter alia, exchange of correspondence with that institution before the authorising decision was taken.

7 Since, according to well-established case-law of the Court of Justice and a consistent administrative practice on the part of the Commission, investment in normal modernisation intended to maintain an undertaking's competitiveness should be carried out using the undertaking's own financial resources, and not through State aid, and investment intended for the renovation and technical modernisation of a production line, which has to be carried out periodically, cannot be regarded as designed to facilitate the development of certain economic activities within the meaning of Article 92(3)(c) of the Treaty, the Commission must, when replying to the observations of concerned parties regarding specific planned aid during the administrative procedure and relating to that case-law and administrative practice, provide precise indications as to whether the criteria established by that case-law and practice can be regarded as having been satisfied or whether it is appropriate, for specific reasons, to derogate from them.

8 The operative part and the statement of reasons of a decision, which must be reasoned under Article 190 of the Treaty, constitute an indivisible whole, with the result that it is for the college of Commissioners alone, in accordance with the principle of collegiate responsibility, to adopt both the one and the other, any alteration to the statement of reasons going beyond simple corrections of spelling or grammar being the exclusive province of that college.

9 In regard to State aid, while there can be no grounds for denying that the Commission is entitled to compare the restructuring measures envisaged by the recipient undertaking with those taken by other undertakings operating in the same economic sector, the fact remains that the restructuring of an undertaking must be targeted at its own specific problems and that the experiences of other undertakings, in different economic and political contexts and at other times, may be irrelevant.

10 The Commission was entitled to form the view that genuine restructuring of one of the three largest European airline companies, which was the recipient of State aid, would have the effect of facilitating the economic development of the European civil aviation sector.

11 Information as to the situation on the markets in question, in particular the position of the undertaking benefiting from the aid and of competing undertakings, constitutes an essential element in the reasoning of a decision relating to the compatibility of planned aid with the common market within the meaning of Article 92 of the Treaty, both where the decision has been taken pursuant to Article 92(1) and where it has been taken pursuant to Article 92(3)(c) of the Treaty and Article 61(3)(c) of the Agreement establishing the European Economic Area in regard to the question whether the aid adversely affects trading conditions to an extent contrary to the common interest.

12 Economic assessments pursuant to Article 92(3)(c) of the Treaty, in respect of which the Commission enjoys a broad discretion, must be made in a Community context. The Commission is for that reason under an obligation to examine the impact of the aid on competition and intra-Community trade.

In order to determine whether aid adversely affects trading conditions to an extent contrary to the common interest, it is necessary to consider, in particular, whether there is an imbalance between the charges imposed on the undertakings concerned on the one hand and the benefits derived from the aid in question on the other. The Commission is under an obligation, when examining the impact of State aid, to weigh the beneficial effects of the aid against its adverse effects on trading conditions and the maintenance of undistorted competition.

The Commission may in principle make a decision authorising aid under Article 92(3)(c) of the Treaty subject to conditions for ensuring that authorised aid does not alter trading conditions to an extent contrary to the general interest.

The legal and practical utility of such conditions of authorisation lies in the fact that, if the recipient undertaking were to fail to observe them, it would be for the Member State concerned to ensure proper implementation of the authorisation decision and for the Commission to assess whether it was appropriate to demand that the aid be repaid. If the State were not to comply with the conditions imposed by the Commission in a decision approving aid, the Commission would be entitled, under the second subparagraph of Article 93(2) of the Treaty, to refer the matter directly to the Court of Justice by way of derogation from Articles 169 and 170 of the Treaty.

Having regard to the way in which the conditions underlying a decision to authorise aid thus operate, the mere assertion that one of those conditions will not be complied with cannot cast doubt on the legality of that decision. In general, the legality of a Community act cannot depend on the possible existence of opportunities for circumvention or on retrospective considerations as to its efficacy.

13 Since the purpose of Article 155 of the Treaty is to provide a general definition of the Commission's powers, it cannot be argued that each time the Commission infringes a specific Treaty provision such infringement involves an infringement of the general provision of Article 155 of the Treaty.

Parties

In Joined Cases T-371/94 and T-394/94,

British Airways plc, a company incorporated under English law, established in Hounslow, England,

Scandinavian Airlines System Denmark-Norway-Sweden, a company incorporated under the laws of Denmark, Norway and Sweden, established in Stockholm,

Koninklijke Luchtvaart Maatschappij NV, a company incorporated under the laws of the Netherlands, established in Amstelveen, the Netherlands,

Air UK Ltd, a company incorporated under English law, established in Stansted, England,

Euralair International, a company incorporated under French law, established in Bonneuil, France,

TAT European Airlines, a company incorporated under French law, established in Tours, France,

represented by Romano Subiotto, Solicitor, with an address for service in Luxembourg at the Chambers of Elvinger, Hoss & Prussen, 15 Côte d'Eich,

applicants in Case T-371/94,

and

British Midland Airways Ltd, a company incorporated under English law, established in Castle Donington, England, represented by Kevin F. Bodley, Solicitor, and Konstantinos Adamantopoulos, of the Athens Bar, with an address for service in Luxembourg at the Chambers of Arsène Kronshagen, 12 Boulevard de la Foire,

applicant in Case T-394/94,

supported by

Kingdom of Sweden, represented by Staffan Sandström, acting as Agent,

Kingdom of Norway, represented by Margit Tveiten, acting as Agent, with an address for service in Luxembourg at the Royal Norwegian Consulate, 3 Boulevard Royal,

Maersk Air I/S, a company incorporated under Danish law, established in Dragøer, Denmark,

and

Maersk Air Ltd, a company incorporated under English law, established in Birmingham, England,

represented by Roderic O'Sullivan and Philip Wareham, Solicitors, having an address for service in Luxembourg at the Chambers of Arendt & Medernach, 8-10 Rue Mathias Hardt,

interveners in Case T-371/94,

Kingdom of Denmark, represented by Peter Biering, Head of Division in the Ministry of Foreign Affairs, acting as Agent, with an address for service in Luxembourg at the Danish Embassy, 4 Boulevard Royal,

and

United Kingdom of Great Britain and Northern Ireland, represented by John E. Collins, of the Treasury Solicitor's Department, acting as Agent, and Richard Plender QC, with an address for service in Luxembourg at the British Embassy, 14 Boulevard Roosevelt,

interveners in both cases,

v

Commission of the European Communities, represented by Nicholas Khan and Ben Smulders, of its Legal Service, acting as Agents, assisted by Ami Barav, of the Bar of England and Wales and of the Paris Bar, with an address for service in Luxembourg at the office of Carlos Gómez de la Cruz, of the Commission's Legal Service, Wagner Centre, Kirchberg,

defendant,

supported by

French Republic, represented by Marc Perrin de Brichambaut, Director of Legal Affairs in the Ministry of Foreign Affairs, and by Edwige Belliard, Catherine de Salins and Jean-Marc Belorgey, respectively Deputy Director, Head of Subdirectorate and Chargé de Mission in the Legal Affairs Directorate of that Ministry, acting as Agents, with an address for service in Luxembourg at the French Embassy, 8B Boulevard Joseph II,

and

Compagnie Nationale Air France, a company incorporated under French law, established in Paris, represented by Olivier d'Ormesson, of the Paris Bar, with an address for service in Luxembourg at the Chambers of Jacques Loesch, 11 Rue Goethe,

interveners,

APPLICATION for the annulment of Commission Decision 94/653/EC of 27 July 1994 concerning the notified capital increase of Air France (OJ 1994 L 254, p. 73),

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES

(Second Chamber, Extended Composition),

composed of: C.W. Bellamy, President, K. Lenaerts, C.P. Briët, A. Kalogeropoulos and A. Potocki, Judges,

Registrar: J. Palacio González, Administrator,

having regard to the written procedure and further to the hearing on 6 and 7 May 1997,

gives the following

Judgment

Grounds

Facts and procedure

Administrative procedure

1 By letter of 18 March 1994, the French authorities informed the Commission, pursuant to Article 93(3) of the EC Treaty, of their plan to inject FF 20 billion into the capital of Compagnie Nationale Air France (`Air France'). Enclosed with that notification was a restructuring plan entitled `Projet pour l'Entreprise' (`the Plan').

2 Following a meeting and an exchange of correspondence with representatives of Air France and the French Government, the Commission opened the procedure under Article 93(2) of the Treaty. It informed the French authorities to that effect by letter of 30 May 1994, which was the subject of a communication published in the Official Journal of the European Communities, C 152 of 3 June 1994, p. 2 (`the communication of 3 June 1994').

3 In that communication, the Commission took the view that the planned capital injection constituted State aid, while pointing out that it had to examine whether the aid plan would affect trade to an extent contrary to the common interest. In that regard, the Commission took the view in particular that:

- economic reality required that account should be taken of the economic situation and prospects of the entire Air France group;

- it had to examine the effects which the aid would have on the competitive situation of Air France on its international and domestic routes competing with other European carriers.

4 The French authorities subsequently sent the Commission a series of letters and, together with representatives of Air France, took part in several meetings organised by the Commission. By 4 July 1994, the Commission had received observations from 23 interested parties, among them the Kingdom of Denmark, the United Kingdom of Great Britain and Northern Ireland, the Kingdom of Sweden, the Kingdom of Norway, the Association des Compagnies Aériennes de la Communauté Européenne (Association of Airline Companies of the European Community, hereinafter `ACE') and a large number of European air companies, including the applicants.

5 Most of the interested parties shared the Commission's doubts regarding the legality of the aid in question. The following were among their principal objections:

- the aid would benefit not only Air France but also the entire group;

- the aid would lead to overcapitalisation of the Air France group;

- the purchase of 17 new aircraft at a cost of FF 11.5 billion would be unacceptable;

- the compatibility of the aid with the common market ought not to be assessed solely from the standpoint of the development of its beneficiary;

- in the event of authorisation of the aid, a massive reduction in Air France's capacity ought to be imposed.

6 The views of the interested parties were communicated to the French authorities, which responded to them by letter of 13 July 1994 to the relevant Commission department. On 14 July 1994, the French Prime Minister sent a letter to the Member of the Commission responsible for such matters, outlining his Government's commitments in the event that the Plan should be approved. On 18 July 1994, the French Government sent a note containing two further commitments. Finally, on 26 July 1994, the French authorities provided the Commission with additional information.

The contested decision

7 On 27 July 1994, the Commission adopted Decision 94/653/EC concerning the notified capital increase of Air France (OJ 1994 L 254, p. 73) (`the contested decision'), which may be summarised as follows.

8 After describing the structure of the Air France group (which is involved in air transport, the hotel industry, tourism, catering, maintenance and pilot training), the Commission noted that it was, together with British Airways and Lufthansa, one of the three biggest European air carriers. Since early 1990, it had been pursuing a strategy of acquiring shareholdings in other airline companies (UTA, Air Inter, Sabena and CSA), with a view in particular to consolidating its influence on the domestic market and meeting competition on international routes. The Air France group had begun a policy of modernisation and expansion of its fleet financed through borrowings, the financial charges on which had negatively affected the group's final result, leading to an initial loss of FF 717.2 million in 1990. To counter this situation, the group had adopted a number of restructuring plans, none of which, however, was successful.

9 In summary, the Commission found that the Air France group was in a state of very serious financial and economic crisis: after a FF 3.2 billion loss in 1992, it recorded its fourth consecutive annual loss, amounting to FF 8.4 billion, in 1993. The group's situation had deteriorated constantly over the previous three years. The gap between the Air France group and its competitors had increased because of the poor results in 1993, which were due mainly to poor productivity, high operating costs and heavy financial charges.

10 The Commission went on to outline the Plan, which was intended to `make Air France a real company' (`faire d'Air France une véritable entreprise'), an aim to be attained between 1 January 1994 and 31 December 1996 through a reduction in costs and financial expenses, through a different conception of the product and better utilisation of resources, through reorganisation of the company and through employee participation.

11 In that context, the Commission noted in particular that the number of new aircraft to be delivered during the restructuring period was to be reduced from 22 to 17 and that the corresponding investment would thus amount to FF 11.5 billion. The operating fleet (145 aircraft) was to be increased by just one plane; the number of seats offered was to be slightly reduced. Air France was also to rationalise its fleet by disposing of a number of aircraft. The mixed nature of its fleet (24 different types or versions) was one of the factors contributing to its high operating costs. In addition, Air France was to simplify its network, increase frequencies on profitable routes, develop long-haul routes, abandon marginal routes and focus on routes where growth prospects were good. As regards personnel, the Plan envisaged in particular staff reductions of 5 000, a wages freeze (subject to re-examination) and a block on promotions. Air France was also to be restructured into 11 operating centres responsible for their own financial results, each centre having its own assets. Implementation of the Plan was to be financed by an increase in capital and by the sale of non-core assets.

12 The Commission noted that, during its negotiations with the French Government, the latter had made a number of commitments regarding implementation of the Plan and the use of the capital granted to Air France, with the capital injection to be made in three tranches: FF 10 billion in 1994, FF 5 billion in 1995 and FF 5 billion in 1996. Those commitments were set out, in the form of conditions, in the operative part of the contested decision.

13 On the basis of the foregoing, the Commission took the view that the capital injection in question constituted State aid within the meaning of Article 92(1) of the Treaty and Article 61(1) of the Agreement on the European Economic Area (`the EEA Agreement'), which, taking into account Air France's large European network and the intense competition existing on most of its routes, distorted competition within the EEA. In addition, the aid affected trade between the EEA countries, given the international character of the civil aviation industry.

14 After excluding the application of other derogating provisions of the Treaty and the EEA Agreement, the Commission examined to what extent the aid met the criteria laid down in Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement.

15 Examining the current situation in the civil aviation industry, the Commission took the view that the sector appeared to have overcome the serious economic crisis which had prevailed since 1990. Despite positive results (increases in passenger traffic), some European airlines were still loss-making because of market overcapacity. However, the prospects for the European aviation industry were quite positive in the medium term. In the light of those forecasts, overcapacity appeared to be a phenomenon of temporary duration. The Commission accordingly took the view that the European air-transport market was not affected by a structural overcapacity crisis and that the state of the aviation industry did not require general capacity cutbacks.

16 After assessing the Plan, the Commission formed the view that its successful implementation was capable of restoring the economic and financial viability of Air France and that a genuine restructuring of the company would contribute to the development of the European air transport industry by improving its competitiveness and was therefore in the common interest. In that connection, a footnote referred to the Commission's action programme `The way forward for civil aviation in Europe' (COM(94) 218).

17 In assessing whether the proposed aid was proportionate to Air France's restructuring needs, the Commission considered that it was both necessary and proportionate to enable the company successfully to accomplish its restructuring plan and return to viability. In that connection, the Commission reviewed the various financial instruments issued by Air France between 1989 and 1993 and concluded that the gearing (debt/equity) ratio would be 1.12:1 at the end of 1996. The structure of the Air France group balance sheet should then be as follows: equity (capitaux propres) = FF 18.65 billion; debt = FF 20.85 billion. That ratio would be above average for the civil aviation industry, in which 1.5:1 was considered to be an acceptable debt/equity ratio. The Commission then stated that, apart from the aid, Air France could improve its financial standing through its own efforts by, inter alia, postponing aircraft orders and selling assets. As regards the first possibility, the Commission noted that Air France had already delayed a number of aircraft orders; further postponement would take the average fleet age beyond 10 years, which was too high for an airline aiming at regaining its competitive strength. So far as the sale of assets was concerned, the Commission noted that there was only a limited number of assets, such as Méridien, Sabena and Air Inter, whose sale could bring in significant amounts of money. Sabena and Air Inter were two important core assets for Air France's aviation business. The sale of the remaining assets was already part of the Plan and would not in any event lead to a significant reduction in the amount of the aid.

18 In verifying that the aid would not affect trade to an extent contrary to the common interest, the Commission referred to the commitments made by the French Government during the administrative procedure - in particular, the commitment that Air France would be the only beneficiary of the aid - and concluded that they limited its concern as to the possible effects of the aid in so far as they virtually prevented Air France from using the aid to cross-subsidise Air Inter's activities. The Commission therefore limited its analysis of the effects of the aid on trade to Air France, the actual beneficiary of the aid.

19 The Commission took the view that those commitments involved severe limitations on capacity, supply and pricing freedom for Air France and prevented it from pursuing an aggressive price policy on all the routes which it operated within the EEA. Further, during the first four months of 1994, Air France had already reduced its supply on the European market by 6.4% in relation to the corresponding period in 1993, whereas that of European airlines as a whole had increased on average by 3.8%. If Air France's supply were limited even below market growth, its market share within the EEA would decrease, to the benefit of its competitors. This would prevent the aid from affecting trade to an extent contrary to the common interest.

20 The Commission pointed out that, for the purpose of analysing the effects of the aid within the EEA, it had also to take into account the increased liberalisation in the air transport sector in the Community following the adoption in 1992 of a number of Council regulations referred to as the `third package'. In that context, it considered that the removal of constraints protecting Air France from competition represented an appropriate compensatory justification for the granting of aid compatible with the common interest.

21 Finally, the Commission considered that the negative effects of the aid were not reinforced through the use of exclusive rights or through privileged treatment for Air France, since the French authorities had undertaken both to modify the traffic distribution rules for the Paris airport system in order to make them non-discriminatory and to ensure that the works necessary to adapt the two air terminals at Orly South and Orly West should not affect conditions of competition to the detriment of the airlines operating at Orly Airport. The Commission also pointed out that, on 27 April 1994, it had adopted a decision requiring France to authorise Community carriers to exercise traffic rights on the routes from Paris (Orly) to Toulouse and Marseille by 27 October 1994 at the latest.

22 The Commission concluded that the commitments made by the French authorities together adequately met the concerns which it had expressed in opening the administrative procedure.

23 Article 1 of the contested decision stated that the aid to be granted in the period 1994 to 1996 in favour of Air France, in the form of a FF 20 billion capital increase to be paid in three tranches, and aimed at its restructuring in accordance with the Plan was compatible with the common market and the EEA Agreement by virtue of Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement, provided that the French Government complied with 16 commitments set out as part of that article.

24 Article 2 of the contested decision made payment of the second and third tranches of the aid subject to fulfilment of those commitments and to the actual implementation of the Plan and achievement of the planned results, in order to ensure that the amount of aid remained compatible with the common market. Before release of the second and third tranches of aid in 1995 and 1996, the French Government was required to submit to the Commission a report on the progress of the restructuring programme and on the economic and financial situation of Air France. The Commission was to have the proper implementation of the Plan and the fulfilment of the conditions laid down for the approval of aid verified by independent consultants.

Procedure before the Court of First Instance

25 The applicants then brought the present actions, which were registered at the Court of First Instance on 21 November 1994 and 22 December 1994 respectively.

26 The written procedures followed the normal course.

27 By orders of the President of the First Chamber (Extended Composition) of the Court of First Instance of 10 March 1995, 8 May 1995 and 12 June 1995, the Kingdom of Denmark, the United Kingdom, the Kingdom of Sweden, the Kingdom of Norway, Maersk Air I/S and Maersk Air Ltd (`the Maersk companies' or `Maersk') were granted leave to intervene in support of the forms of order sought by the respective applicants.

28 By orders of the President of the First Chamber (Extended Composition) of the Court of First Instance of 12 June 1995, the French Republic was granted leave to intervene in support of the forms of order sought by the defendant.

29 By orders of the Court of First Instance (First Chamber, Extended Composition) of 12 June 1995, Air France was granted leave to intervene in support of the forms of order sought by the defendant and to plead in French during the oral procedures.

30 By decision of the Court of First Instance, the Judge-Rapporteur was transferred to the Second Chamber (Extended Composition), to which the cases were accordingly allocated.

31 Upon hearing the report of the Judge-Rapporteur, the Court of First Instance (Second Chamber, Extended Composition) decided to open the oral procedures without any preparatory inquiry. It did, however, request the parties to amplify their submissions on a number of issues.

32 The parties presented oral argument and replied to the Court's questions at the hearing on 6 and 7 May 1997.

33 On that occasion, the Court adopted a measure of organisation of procedure under Article 64 of its Rules of Procedure, inviting the applicants and the interveners supporting them to lodge with the Registry the observations which they had submitted to the Commission during the administrative procedure, to the extent that they were not yet included on the case-file. The observations of British Airways plc (`British Airways'), TAT European Airlines (`TAT'), Scandinavian Airlines System Denmark-Norway-Sweden (`SAS'), Euralair International (`Euralair') and Air UK Ltd (`Air UK') were thus lodged with the Registry on 8 May 1997, those of the Kingdom of Denmark, the United Kingdom, the Kingdom of Sweden and the Kingdom of Norway having already been lodged during the hearing.

34 Having heard the parties' arguments on this point during the hearing, and in the absence of any objection on their part in that regard, the Court of First Instance (Second Chamber, Extended Composition) takes the view that the two cases should be joined for the purpose of giving judgment.

Forms of order sought

35 The applicants claim, in both cases, that the Court should:

- annul the contested decision; and

- order the Commission to pay the costs.

The applicant in Case T-394/94 further requests the Court to prescribe measures of organisation of procedure and measures of inquiry, in accordance with Articles 64 and 65 of the Rules of Procedure, and order production of all the relevant files and documents available to the Commission.

36 The United Kingdom claims that the Court should:

- annul the contested decision; and

- order the Commission to pay the costs, including those of the United Kingdom.

37 The Kingdom of Denmark, the Kingdom of Sweden and the Kingdom of Norway claim that the Court should:

- annul the contested decision.

38 The Maersk companies claim that the Court should:

- annul the contested decision; and

- order the Commission to pay the costs of their intervention in so far as such a decision lies within the discretion of the Court.

39 The Commission contends that the Court should:

- dismiss the applications;

- order the applicants to pay the costs; and

- order the Kingdom of Denmark, the United Kingdom, the Kingdom of Sweden, the Kingdom of Norway and the Maersk companies to contribute to the Commission's costs.

40 The French Republic contends that the Court should:

- dismiss the applications.

41 Air France contends that the Court should:

- dismiss the applications; and

- order the applicants to pay the costs, including those incurred by Air France.

Substance

42 In support of their applications the applicants raise several pleas in law, which may be classed in two groups. In the pleas in the first group (I), they claim that the Commission breached the rules relating to the administrative procedure provided for under Article 93(2) of the Treaty by failing to obtain sufficient information and/or to provide the parties concerned, including the applicants, with sufficient information to enable them to be properly heard and effectively exercise the rights conferred on them by Article 93(2) of the Treaty and Article 62(1)(a) of the EEA Agreement. They also criticise the Commission for not having called on independent experts to assess whether the contested aid was compatible with Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement and claim that it failed to take all necessary steps to verify whether the information provided by the French authorities and Air France was well founded.

43 In the pleas in the second group (II), the applicants claim that the Commission committed a number of errors in the application of Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement. It is claimed in this connection that the Commission breached the principle of proportionality applicable in matters of State aid by (A) wrongly authorising Air France to purchase 17 new aircraft, (B) wrongly authorising the financing of operating costs and operational measures of Air France, (C) incorrectly classifying the securities issued by Air France between 1989 and 1993, (D) misconstruing Air France's debt/equity ratio and (E) wrongly failing to require the sale of disposable assets of Air France. The applicants further claim that the Commission wrongly formed the view that the aid was intended to facilitate the development of an economic activity without affecting trading conditions to an extent contrary to the common interest. Their criticism in this connection is principally directed at 12 of the 16 conditions of authorisation imposed by the decision authorising the aid. Finally, the applicants question, in several respects, whether Air France's restructuring plan is appropriate and submit that the Commission wrongly concluded that the Plan was such as to restore the economic viability of Air France. In those various contentions, the applicants also argue that the Commission provided inadequate reasoning for the contested decision. Finally, the applicant in Case T-394/94, British Midland Airways Ltd (`British Midland'), claims that there has been a breach of Article 155 of the Treaty.

I - The pleas alleging irregularities in the conduct of the administrative procedure

Summary of the parties' arguments

44 The applicant in Case T-394/94 argues, in substance, that the administrative procedure under Article 93(2) of the Treaty is adversarial and that the Commission ought therefore to have provided the parties concerned with sufficient information to enable them to appreciate fully the potential effect that the aid might have on them. In the circumstances, the Commission's communication of 3 June 1994 was inadequate. In particular, the Commission:

- did not explain how the sum of FF 20 billion was calculated;

- failed to indicate, in regard to the acquisition of 17 new aircraft, what types of aircraft would be acquired or what types of aircraft the fleet would comprise;

- did not provide a copy of the restructuring plan;

- predicted a 30% or 33.3% increase in productivity without explaining the basis of such calculation;

- did not provide details of the cost of the proposed voluntary redundancies;

- failed to provide details of Air France's assets and to explain the breakdown between core and non-core assets;

- did not give any valuation of the Méridien hotel chain;

- did not give details of the value of Air France's shareholding in Air Inter, Sabena or others, or explain why these were not considered to be non-core assets;

- did not provide details of Air France's proposed route network so as to enable its possible effects on competition to be calculated;

- did not give details of proposed `new products' referred to by Air France, so as to enable an assessment of their effect on competition;

- did not have Air France's annual accounts at the time when the contested decision was taken;

- failed to explain why it did not insist on the disclosure of essential information necessary for the adoption of a reasoned decision on the compatibility of the aid with the common market;

- did not take subsidiaries - in particular Air Inter - into account, as the restructuring plan concentrated solely on Air France; and

- did not explain how the proposals for Air France to continue expansion plans could be reconciled with the aims of the Treaty, particularly in the light of the failure of the two earlier capital injections of FF 5.8 billion.

45 In the observations which it submitted to the Commission during the administrative procedure, British Midland had already raised most of the abovementioned points when it requested the Commission inter alia to show it the restructuring plan submitted by Air France, on the ground that it would otherwise not have sufficient information to comment meaningfully on the planned aid.

46 The applicants in Case T-371/94 also take the view that the information in the communication of 3 June 1994 was inadequate. Greater precision in the communication regarding Air France's intention to increase frequencies on profitable routes, develop long-haul routes, abandon marginal routes and focus on routes where growth prospects were good would have enabled the applicants to assist the Commission in assessing this aspect of the restructuring plan. In particular, they claim, the Commission did not set out Air France's justification for the need to purchase 17 new aircraft, so that the applicants could not submit the necessary information which would have enabled the Commission to consider that aspect of the case carefully and impartially.

47 They also point out that the communication makes no mention of the unit of measurement referred to as `equivalent revenue passenger kilometre' (`ERPK'). The contested decision confronted them for the first time with this unit, which was tailor-made for Air France and applied to the calculation of their own presumed current and forecast productivity.

48 The applicants further submit that the Commission ought to have verified the French version of the communication regarding the passage relating to the possible overcapitalisation of Air France. The transfer of ORAs (obligations remboursables en actions - bonds redeemable into shares) and TSDIs (titres subordonnés à durée indéterminée reconditionnés - repackaged perpetual floating-rate notes) `from the side of the debts into the equity', in the English version, was rendered in French by a transfer `du passif vers l'actif'. This translation error must have made it more difficult for third parties using the French version to submit pertinent comments.

49 Finally, they consider that, in view of the complexity of this case, the Commission ought to have been assisted by independent experts in airline economics, finance and business. As is clear from Article 2 of the contested decision, which provides for the involvement of independent consultants before the second and third tranches of the aid are released, the Commission itself recognises the indispensability of having outside experts to verify the proper implementation of the restructuring plan. It thus accepts implicitly that it has insufficient expertise to do so on its own.

50 The applicants in both cases take the view that the Commission, in adopting the contested decision, demonstrated an unseemly degree of haste, incompatible with proper respect for their fundamental rights or for those of the other parties concerned. The contested decision was taken only 16 working days after the date by which interested parties had to submit their comments, an exceptionally short time in which to examine, deliberate upon and resolve the complex issues raised by the planned aid in issue. The period between the date on which the procedure under Article 93(2) of the Treaty was opened (3 June 1994) and the date on which the contested decision was adopted (27 July 1994) was 37 working days and thus much shorter than the average period in similar cases.

51 The Kingdom of Denmark pointed out at the hearing that it had unsuccessfully requested the Commission, during the administrative procedure, to send the French Government's response to the communication of 3 June 1994 to the other Member States, so as to enable them to submit their observations before the Commission took its decision.

52 The Commission counters by stating that the procedure under Article 93(2) of the Treaty is not adversarial vis-à-vis interested third parties. Such parties are not entitled to be treated identically to the addressee of the final decision. The Commission refers to the case-law on competition, according to which the procedural rights of complainants are not as far-reaching as the right to a fair hearing enjoyed by the companies which are the object of the Commission's investigation.

53 With regard to the communication opening the procedure under Article 93(2), the Commission stresses that its sole aim is to obtain from persons concerned all information required for its guidance with regard to future action. In the present instance, the communication of 3 June 1994 stated all the aspects in regard to which it wished to receive observations in order to be able to state its views with regard to the planned aid notified by the French authorities. In that communication, it provided all the information necessary to enable the parties concerned to express their views.

54 More generally, the Commission considers that it can only provide the information which is in its possession at the time the communication is issued, which is not irrelevant and which is not covered by the obligation of professional or commercial secrecy. Moreover, the purpose of a communication under Article 93(2) is not to express a concluded view but to raise questions. As regards the comprehensive information which, in the applicants' view, ought to have been included in the communication of 3 June 1994, the Commission states that most of the points raised were either covered by the obligation of commercial secrecy or did not raise doubts in regard to which it would have required additional information.

55 As regards the time taken for consideration of the case, the Commission points out that the aid plan in issue was notified on 18 March 1994 and that the contested decision was taken on 27 July 1994, 131 days later. The time which elapsed between those two dates was approximately the same as in similar cases (Commission Decision 91/555/EEC of 24 July 1991 on aid to be granted by the Belgian Government in favour of the air carrier Sabena (OJ 1991 L 300, p. 48) (`the Sabena decision'), Commission Decision 94/118/EC of 21 December 1993 concerning aid to be provided by the Irish Government to the Aer Lingus group (OJ 1994 L 54, p. 30) (`the Aer Lingus decision') and Commission Decision 94/698/EC of 6 July 1994 concerning increase in capital, credit guarantees and tax exemption in favour of TAP (OJ 1994 L 279, p. 29) (`the TAP decision')). Moreover, Article 10(3) of Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (OJ 1989 L 395, p. 1) (`Regulation No 4069/89'), according to which a decision declaring a notified concentration to be compatible with the common market should be made within four months, confirms that such a period is reasonable.

56 Finally, the Commission considers that there is no legal obligation on it to have recourse to outside experts before reaching its decisions.

Findings of the Court

General aspects

57 As a preliminary consideration, it must be borne in mind that the disputed aid plan was officially notified by the French authorities to the Commission, which, once it had decided to open the procedure provided for under Article 93(2) of the Treaty, was under an obligation to give `notice to the parties concerned to submit their comments' before it reached a decision on the matter.

58 The purpose of that provision of Article 93(2), it should be pointed out, has been held by the Court of Justice to be to oblige the Commission to take steps to ensure that all persons who may be concerned are notified and given an opportunity of putting forward their arguments (Case 323/82 Intermills v Commission [1984] ECR 3809, paragraph 17) and to allow the Commission to be fully informed of all the facts of the case before taking its decision (Case 84/82 Germany v Commission [1984] ECR 1451, paragraph 13).

59 With more particular regard to the Commission's duty to inform interested parties, the Court of Justice has ruled that the publication of a notice in the Official Journal of the European Communities is an appropriate means of informing all the parties concerned that a procedure has been initiated (Intermills v Commission, cited above, paragraph 17), while also pointing out that `the sole aim of this communication is to obtain from persons concerned all information required for the guidance of the Commission with regard to its future action' (Case 70/72 Commission v Germany [1973] ECR 813, point 19). This Court has followed that case-law, which confers on the parties concerned essentially the role of information sources for the Commission in the administrative procedure instituted under Article 93(2) of the Treaty (Case T-266/94 Skibsværftsforeningen and Others v Commission [1996] ECR II-1399, paragraph 256).

60 It follows that, far from enjoying the same rights to a fair hearing as those which individuals against whom a procedure has been instituted are recognised as having (see, to that effect, Joined Cases 142/84 and 156/84 BAT and Reynolds v Commission [1987] ECR 4487, paragraphs 19 and 20, concerning competition, and Case C-142/87 Belgium v Commission [1990] ECR I-959, paragraph 46), interested parties have only the right to be involved in the administrative procedure to the extent appropriate in the light of the circumstances of the case.

61 There may be two reasons for restricting the extent of the right to participate and to be informed which interested parties enjoy in the context of the administrative procedure instituted under Article 93(2) of the Treaty.

62 First, where - as in the present instance - a Member State notifies the Commission of planned aid and submits supporting documentation, and the relevant Commission departments subsequently hold a series of meetings with officials from the Member State in question, the amount of information in the Commission's possession may already be relatively extensive, leaving outstanding only a small number of doubts which information supplied by the parties concerned may dispel. In so far as they relate to the details of the planned aid, to the economic, financial and competitive position of the recipient undertaking and to its internal operations, the discussions between the Member State and the Commission will inevitably be more thorough than those conducted with the parties concerned. While providing such parties with general information on the essentials of the planned aid, therefore, the Commission may confine itself to concentrating its communication in the Official Journal on those aspects of the Plan concerning which it still harbours doubts.

63 Second, the Commission is required, under Article 214 of the Treaty, not to disclose to interested parties information of the kind covered by the obligation of professional secrecy, in particular information relating to the internal operations of the recipient undertaking. In that regard, the position of interested parties is not distinguishable from that of complainants in competition cases who, according to the case-law of the Court of Justice, may not receive documents containing business secrets (BAT and Reynolds v Commission, cited above in paragraph 60, paragraph 21).

64 The limited nature of the abovementioned rights to participate and to be informed, in so far as they relate solely to the administrative procedure, is not at variance with the Commission's duty under Article 190 of the Treaty to provide, in its final decision authorising planned aid, sufficient reasons which must address all the essential complaints which parties directly and individually concerned by that decision have made either on their own initiative or as a result of information supplied by the Commission. Thus, even on the assumption that the Commission may, in a particular case, validly prefer to use other sources of information and thereby reduce the significance of the participation of interested parties, it is not thereby released from its obligation to include an adequate statement of reasons in its decision (see paragraph 96 below).

65 It is in the light of the principles set out above that the Court must examine the alleged irregularities which are claimed to have vitiated the course of the administrative procedure, it being understood and undisputed that the applicants, the interveners supporting them and ACE, which all opposed authorisation of the disputed aid plan during the administrative procedure before the Commission, must be treated as parties concerned for the purposes of Article 93(2) of the Treaty, as construed by the Court of Justice in paragraph 16 of Intermills v Commission, cited above in paragraph 58.

The communication of 3 June 1994

66 With regard, first, to the allegedly inadequate nature of the communication of 3 June 1994, it must be noted that the communication deals with:

- Air France's economic and financial situation prior to the drafting of the aid plan, in particular the previous restructuring plans and capital injections and its accumulated losses;

- the `particular ... topics' on which the new restructuring plan focuses;

- the projected aid amount of FF 20 billion; and

- the main doubts expressed by the Commission at that stage of the procedure concerning in particular the productivity gains of Air France, the structure of the Air France group, the competitive position of Air France and the possibility of its being overcapitalised.

The Court takes the view that such information was sufficient to enable the parties concerned to present their arguments effectively before the Commission.

67 As regards the view taken by the applicants in Case T-371/94 that the ERPK unit of measurement, Air France's air network and its future development and the reasons justifying the acquisition of 17 new aircraft ought also to have featured in the communication, the Commission's reply to the effect that it did not entertain any doubts on those specific points is sufficient to justify the absence in that communication of any reference to those matters; that, however, does not mean that the applicants may not ask the Court to examine whether the Commission's final decision is adequately reasoned in regard to those matters or whether it contains manifest errors of assessment or of law.

68 With regard to the complaint raised by the applicant in Case T-394/94 that there was no notification of the numerous details mentioned above (see paragraph 44 above), the Commission is justified in invoking the obligation of business secrecy which prohibited it from disclosing commercially sensitive information on Air France to that airline's competitors. In particular, the restructuring plan - at the stage prior to its approval by the Commission and to the start of its implementation - contained such information, and it was clearly not a matter for competitors to evaluate, and compare with their own management measures, each of the restructuring measures envisaged by Air France. Were the position otherwise, competitors would be able to interfere in the internal restructuring of Air France and to attempt to `dictate' the measures which they might see fit for that company, after having obtained valuable information on their competitor. Such an analysis is not gainsaid by the fact that other interested parties, such as ACE (p. 27, final paragraph, of its observations), have apparently been able to obtain this restructuring plan. That fact cannot lead the Commission to infringe Article 214 of the Treaty.

69 It should be added that Air France's annual accounts for 1993 were published in the Bulletin des Annonces Légales Obligatoires of 17 June 1994, at p. 10207 (point 319 of Air France's statement in intervention in Case T-371/94), and were thus available to the parties concerned. Those parties cannot therefore criticise the Commission for not having disclosed the definitive figures in its communication of 3 June and cannot argue that it took its final decision without knowledge of that information.

70 Finally, the allegations that the Commission failed to obtain essential information before adopting its final decision and did not sufficiently check all relevant aspects of the case amount to no more than general assertions and assumptions unsupported by any concrete evidence. The Commission was thus entitled simply to reply that it had indeed obtained all useful and necessary information which was the subject of detailed verification on its part. Furthermore, those allegations in fact concern not the stage of the communication of 3 June 1994 but the later stage of the contested decision. The same is true of the final two heads of complaint raised by the applicant in Case T-394/94 (see paragraph 44 above), which are in reality directed against the legality of the contested decision and concern the statement of reasons and the assessment of the merits therein. They will for those reasons be examined below in a separate context.

The time taken for consideration of the case

71 The applicants take the view that, given the complexity of the disputed aid plan, the period which the Commission gave itself for examining that plan before adopting the contested decision was too short. It must first be pointed out in this regard that there is nothing in the Treaty or in Community legislation requiring decisions on State aid adopted at the conclusion of the procedure under Article 93(2) of the Treaty to comply with a fixed period. Furthermore, assuming that the Commission acted with excessive haste and did not give itself sufficient time to examine the disputed plan, such conduct could not, by itself, justify annulment of the contested decision. To entail annulment, such conduct would have to involve a breach of specific rules governing procedure, the duty to provide reasons or the internal legality of the contested decision. Consequently, without its being necessary to express a view on the relevance of the Commission's decision-making practice in regard to concentrations, this contention must be rejected.

The need for external experts

72 The complaint that the Commission failed to seek assistance from external experts when drafting the contested decision is manifestly lacking any foundation, since no provision of the Treaty or of Community legislation imposes any such obligation on it. It should be added that the Commission was, in any event, relatively well informed on the air transport sector before it adopted the contested decision. In that connection, it had already familiarised itself with the air transport situation, which was dealt with, in particular, in the report entitled `Expanding Horizons' published at the beginning of 1994 by the `Comité des Sages' (Committee of Wise Men), in the programme `The way forward for civil aviation in Europe', and in the publications of the International Air Transport Authority (IATA) and the Association of European Airlines (AEA). In addition, the Commission had adopted other decisions within the air transport sector, such as the Sabena, Aer Lingus and TAP decisions (cited above in paragraph 55). Finally, nothing in the present case indicates that the Commission had need of external expert assistance.

The translation error

73 The error in the French text of the communication of 3 June 1994, pointed out by the applicants in Case T-371/94, is so obvious that those familiar with the air sector would readily have been aware of it. It is clear that loan bonds cannot, according to accounting principles, be transferred `du passif vers l'actif' (`from the side of the debts into the equity' in the English text of the communication), but must be classified, exclusively on the liabilities side, either as equity or as debt.

74 In any event, the Commission expressly pointed out, in the relevant passage of its communication, that it had still to examine in detail the classification of the bonds in question. Its assessment was thus not yet definitive in that passage, including the point distorted by the abovementioned error. That error cannot therefore affect the legality of the administrative procedure, since the crucial question in that regard is solely whether the final decision was also affected by that error and the applicants have not even alleged that to have been the case.

The participation of other Member States

75 The plea submitted by the Kingdom of Denmark, that the Commission should have forwarded to the other Member States the French Government's reply to the communication of 3 June 1994, must be dismissed as inadmissible since it was not raised by the applicants. In view of the fact that interveners must, under Article 116(3) of the Rules of Procedure, accept the case as they find it at the time of their intervention and that their submissions in an application to intervene are, under the fourth paragraph of Article 37 of the EC Statute of the Court of Justice, limited to supporting the submissions of one of the main parties, the Kingdom of Denmark is not, as an intervener, entitled to raise that plea in law (see, to the same effect, Case C-313/90 CIRFS and Others v Commission [1993] ECR I-1125, paragraphs 19 to 22).

76 In any event, the text of Article 93 of the Treaty does not require the Commission to forward to the other Member States observations which it has received from the Government of the State seeking authorisation to grant aid. On the contrary, it follows from the third subparagraph of Article 93(2) that the other Member States may be involved in a specific case of aid only where that case has, at the request of the State concerned, been submitted to the Council.

Conclusion

77 In the light of the foregoing, the procedure under Article 93(2) of the Treaty followed in the present case was not vitiated by any defect and the pleas in law relating thereto must therefore be dismissed.

II - The pleas alleging errors of assessment and errors of law committed by the Commission in breach of Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement

General aspects

78 In the contested decision, the Commission examined the legality of the disputed aid in the light of Article 92(3)(c) of the Treaty and Article 61(3)(c) of the EEA Agreement. In that examination, it found that a genuine restructuring of Air France would be in the common interest, that the amount of aid did not appear to be excessive and that the aid would not affect conditions of trade to an extent contrary to the common interest.

79 It has consistently been held that the Commission enjoys a broad discretion in the application of Article 92(3) of the Treaty (see, for instance, Case 730/79 Philip Morris v Commission [1980] ECR 2671, paragraphs 17 and 24, Case 310/85 Deufil v Commission [1987] ECR 901, paragraph 18, and Case C-301/87 France v Commission [1990] ECR I-307, paragraph 49). Since that discretion involves complex economic and social appraisals, the Court must, in reviewing a decision adopted in this context, confine itself to verifying whether the Commission complied with the rules governing procedure and the statement of reasons, whether the facts on which the contested finding was based have been accurately stated and whether there has been any manifest error of assessment or misuse of powers (Case C-56/93 Belgium v Commission [1996] ECR I-723, paragraph 11, and the case-law cited therein). In particular, it is not for the Court to substitute its own economic assessment for that of the author of the decision (Case C-225/91 Matra v Commission [1993] ECR I-3203, paragraph 23). The Court takes the view that this case-law is equally relevant to the examination under Article 61(3)(c) of the EEA Agreement.

80 In the present cases, the Commission points out that the applicants' contentions are in part based on events occurring after the contested decision was adopted. In reply, the applicants argue that some of those subsequent events form part of a continuing and uninterrupted succession of facts of which the Commission should have been aware. Furthermore, certain subsequent facts illustrate clearly the comments submitted by the applicants during the administrative procedure.

81 Here, it must be borne in mind that, in the context of an action for annulment under Article 173 of the Treaty, the legality of a Community measure falls to be assessed on the basis of the elements of fact and of law existing at the time when the measure was adopted (Joined Cases 15/76 and 16/76 France v Commission [1979] ECR 321, paragraph 7, and Case T-77/95 SFEI and Others v Commission [1997] ECR II-1, paragraph 74) and cannot depend on retrospective considerations of its efficacy (Case 40/72 Schroeder v Germany [1973] ECR 125, paragraph 14). In particular, the complex assessments made by the Commission must be examined solely on the basis of the information available to the Commission at the time when those assessments were made (Case 234/84 Belgium v Commission [1986] ECR 2263, paragraph 16, and Case C-241/94 France v Commission [1996] ECR I-4551, paragraph 33).

82 It is in the light of the above principles that the substantive pleas and arguments here raised by the applicants - which challenge the assessments as to whether the aid was proportionate, as to the impact of that aid on the civil aviation sector within the EEA, and as to the appropriateness of the restructuring plan accompanying the disputed aid - must be examined.

The contentions based on breach of the principle of proportionality applicable in regard to State aid

83 In these contentions, the applicants and the interveners supporting them claim that the Commission authorised aid in an amount exceeding the restructuring requirements of Air France. These contentions are based essentially on the judgment in Philip Morris v Commission (paragraph 17, cited above in paragraph 79), in which the Court of Justice ruled that Member States could not be permitted to make payments which would improve the financial situation of the recipient undertaking `although they were not necessary for the attainment of the objectives specified in Article 92(3)'.

A - The contention that the Commission was wrong to authorise the purchase by Air France of 17 new aircraft

Summary of the parties' arguments

84 The applicants consider that it was disproportionate to approve aid the purpose of which was to permit Air France to purchase 17 new aircraft. The Commission, they claim, was clearly wrong in concluding that the amount of aid could not be reduced by cancelling or postponing the orders placed by Air France for a value of FF 11.5 billion. The costs of the periodically necessary renovation of the fleet, being an investment in capital assets, in principle form part of an airline's operating costs. Such renovation must be carried out without State intervention. In any event, the acquisition of new aircraft was not essential for Air France.

85 The applicants in Case T-371/94 also claim that the Commission provided an inadequate statement of reasons in that regard, even though it had been informed during the administrative procedure that the purchase of 17 new aircraft was not an essential element in Air France's restructuring plan and ought therefore to be cancelled. The Commission failed to consider seriously the third-party comments filed in response to its communication of 3 June 1994. The applicant in Case T-394/94 and the Maersk companies, in intervention, argue generally that the Commission neglected to provide a proper statement of reasons by failing, in particular, to deal properly with the detailed submissions made to it by third parties during the administrative procedure.

86 The Commission stresses that it was necessary for Air France to acquire the 17 new aircraft. It refers to the wording of the contested decision, which states that Air France's high operating costs were partly due to the considerable diversity of its fleet, rationalisation of which was envisaged within the framework of the restructuring plan (contested decision, OJ pp. 75 and 76). Far from rejuvenating the fleet, the Plan merely slows down its ageing. New jet aircraft are significantly more fuel-efficient, comply with environmental protection regulations and have low repair and maintenance costs. Finally, they have a greater passenger appeal.

87 So far as its obligation to state reasons is concerned, the Commission takes the view that the contested decision is in accordance with Article 190 of the Treaty. It is sufficient for the decision to set out the principal issues of law and fact upon which it is based and which are necessary in order that the reasoning which led the Commission to its decision may be understood (Case 24/62 Germany v Commission [1963] ECR 63, at p. 69). It is not required to discuss all the issues of fact and law which have been raised by every party during the administrative procedure (see, for example, Joined Cases 209/78 to 215/78 and 218/78 Heintz Van Landewyck and Others v Commission [1980] ECR 3125, paragraph 66). Finally, the requirements to be satisfied by the statement of reasons depend on the circumstances of each case, in particular the content of the measure in question, the nature of the reasons given and the need for information of the undertakings to whom the measure is addressed. In the Commission's view, the conditions laid down in the case-law referred to above were fully complied with in the contested decision, which, in 17 pages of the Official Journal, sets out all the relevant issues of fact and law surrounding this case and summarises the objections raised by third parties during the administrative procedure. In particular, the Commission denies that it failed to take account of the observations submitted during that procedure. Those observations were duly considered and conveyed to the French authorities for their comments.

Findings of the Court

88 In view of the arguments put forward by the applicants, it is first necessary to ascertain whether the contested decision contains an adequate statement of reasons in regard to the authorisation of Air France's purchase of 17 new aircraft. It must first of all be pointed out in this regard that, in the light of the settled case-law to the effect that any absence of a statement of reasons may be raised by the Court itself of its own motion (Case 18/57 Nold v High Authority [1959] ECR 41, at p. 52, Case C-166/95 P Commission v Daffix [1997] ECR I-983, paragraphs 24 and 25, and Case T-61/89 Dansk Pelsdyravlerforening v Commission [1992] ECR II-1931, paragraph 129), the Court invited the applicants and the interveners supporting them to lodge the observations which they had submitted to the Commission during the administrative procedure in their capacity as parties concerned within the meaning of Article 93(2) of the Treaty, to the extent that those observations were not yet included in the case-file (see paragraph 33 above).

89 In line with the settled case-law of the Court of Justice, the statement of reasons required by Article 190 of the Treaty must disclose in a clear and unequivocal fashion the reasoning followed by the Community authority which adopted the measure in question in such a way as to make the persons concerned aware of the reasons for the measure and thus enable them to defend their rights and the Court to exercise its supervisory jurisdiction (Case C-350/88 Delacre and Others v Commission [1990] ECR I-395, paragraph 15, and the case-law there cited).

90 So far as concerns the notion of `persons concerned' within the meaning of the above case-law, the Court of Justice has ruled, in a case involving a Commission decision refusing to authorise an aid plan drawn up by a Member State for the benefit of a State-controlled undertaking, that the requirement of a statement of reasons must be assessed on the basis, in particular, of the interest which those to whom the measure is addressed `or of other parties to whom it is of direct and individual concern', within the meaning of Article 173 of the Treaty, may have in receiving explanations (Joined Cases 296/82 and 318/82 Netherlands and Leeuwarder Papierwarenfabriek v Commission [1985] ECR 809, paragraph 19).

91 The Court of Justice has subsequently ruled that an undertaking in competition with an undertaking receiving State aid must be regarded as a `party concerned' within the meaning of Article 93(2) of the Treaty and must, in that capacity, be considered to be directly and individually concerned by the Commission decision authorising payment of the aid in question. In so doing, the Court of Justice also pointed out that the parties concerned within the meaning of Article 93(2) had already been defined as the persons, undertakings or associations whose interests might be affected by the grant of the aid, in particular competing undertakings and trade associations (Case C-198/91 William Cook v Commission [1993] ECR I-2487, paragraphs 24 to 26, and the case-law there cited).

92 The requirement to provide reasons for a decision taken in regard to State aid thus cannot be determined solely on the basis of the interest which the Member State to which that decision is addressed may have in obtaining information. Where a Member State has obtained from the Commission what it was seeking, namely authorisation for its planned aid, its interest in having a reasoned decision addressed to it may be greatly reduced, in contrast to that of competitors of the beneficiary of the aid, in particular where it has received sufficient information during the negotiations with the Commission through, inter alia, exchange of correspondence before the authorising decision was taken.

93 In the present instance, it is common ground that the applicants, the Maersk companies, as interveners, and ACE are parties concerned within the meaning of Article 93(2) of the Treaty and that the contested decision is of direct and individual concern to them within the meaning of the fourth paragraph of Article 173 of the Treaty, given that their market position is significantly affected by the aid measure which it authorises (Case 169/84 Cofaz and Others v Commission [1986] ECR 391, paragraph 25).

94 According to settled case-law, the question whether the statement of the grounds for a decision meets the requirements of Article 190 of the Treaty must be assessed with regard not only to its wording but also to its context and all the legal rules governing the matter in question (Delacre and Others v Commission, cited above in paragraph 89, paragraph 16 and the case-law there cited). While the Commission, in the statement of reasons for a decision, is not required to discuss all the issues of fact and law raised by interested parties during the administrative procedure (Case C-360/92 P Publishers Association v Commission [1995] ECR I-23, paragraph 39), it must none the less take account of all the circumstances and all the relevant factors of the case (Joined Cases C-329/93, C-62/95 and C-63/95 Germany and Others v Commission [1996] ECR I-5151, hereinafter `the Bremer Vulkan judgment', paragraph 32) so as to enable the Court to review its lawfulness and make clear to the Member States and the persons concerned the circumstances in which the Commission has applied the Treaty (Publishers Association, cited above, paragraph 39).

95 It should be added that the Commission adopted the contested decision pursuant to Article 92(3) of the Treaty, in an area in which it enjoys a broad discretion (see paragraph 79 above). Since the Court of Justice has ruled that the Commission's discretion carries with it a duty to examine carefully and impartially all relevant aspects of the individual case (Case C-269/90 Hauptzollamt München-Mitte v Technische Universität München [1991] ECR I-5469, paragraph 14), review of that obligation requires a sufficiently precise statement of reasons in order to enable the Court to be satisfied that it has been complied with.

96 It is thus necessary to ascertain whether the statement of reasons in the contested decision indicates clearly and unequivocally the Commission's reasoning, particularly in view of the essential complaints concerning the assessment of the contested aid plan put to the Commission during the administrative procedure by British Airways, TAT, Koninklijke Luchtvaart Maatschappij (`KLM'), SAS, Air UK, Euralair, British Midland and by ACE, in particular on behalf of Euralair and Maersk, by the Kingdom of Denmark, the United Kingdom, the Kingdom of Sweden and the Kingdom of Norway (the `parties concerned').

97 On an overall reading of the observations lodged with the Court, it transpires that some of those parties had, in particular, insisted before the Commission on the unacceptable nature of the acquisition of 17 new aircraft for FF 11.5 billion, as provided for in the restructuring plan. Since, in the face of the crisis generated by overcapacity, all airline companies not in receipt of subsidies were compelled to cancel or postpone orders for new aircraft at the beginning of the 1990s, Air France, it was argued, could not escape such an obligation. The decision to invest FF 11.5 billion in acquiring aircraft would increase additional capital requirements and consequently Air France's debts. In view of its disastrous financial situation, it would not be justified in using receipts from the sale of other assets for the purpose of such financing. In order to ensure uniformity within the Air France fleet, provided for in the restructuring plan, it would have been more appropriate to modify existing aircraft.

98 In particular, TAT (p. 18 of its observations) and the United Kingdom (p. 6 of its observations) stressed that the investment represented by the acquisition of 17 new aircraft concerned Air France's short-term operational activities, not its restructuring. It was normal modernisation designed to maintain the company's competitiveness. Such a measure should be financed through an undertaking's own resources and not through State aid. In this case it was inevitable that, contrary to the requirements of the case-law and the Commission's decision-making policy, the contested aid would be used to finance the purchase of those aircraft. Such aid should be classified as operational aid, not compatible with the requirements of Article 92(3)(c) of the Treaty. In that context, reference was made to the judgments in Deufil (cited above in paragraph 79) and in Joined Cases 62/87 and 72/87 Exécutif Régional Wallon and Glaverbel v Commission [1988] ECR 1573, and to Commission Decision 90/70/EEC of 28 June 1989 concerning aid provided by France to certain primary processing steel undertakings (OJ 1990 L 47, p. 28).

99 In that regard, the Court notes that the Commission pointed out, in the contested decision, that one of the factors affecting the Air France group's operating performance was its fleet mix, which comprised too many different types of aircraft (24 different types or versions), contributing to the high operating costs (for example, particularly high maintenance costs resulting from the large number of different spare parts and different qualifications for flying and ground personnel). As of 31 December 1993, the group's fleet consisted of 208 aircraft (Air France's operating fleet consisted of 145 aircraft), with an average age of 8.6 years (contested decision, OJ, p. 75).

100 With regard to the `particular ... topics' on which the restructuring plan focused, the Commission pointed out that it was intended to adjust the number of new aircraft to be delivered during the restructuring period from 22 to 17. The corresponding investment would thus be FF 11.5 billion (contested decision, OJ, p. 75). As for the capital necessary for this investment, the Commission noted the postponement of aircraft orders, which, at the end of the restructuring period, would increase the average fleet age to some 9.3 years. Any further delay in fleet investment would simply mean a further deterioration of this figure which could harm Air France's competitiveness and endanger the viability of the restructuring (contested decision, OJ, p. 82).

101 In examining whether the aid was proportionate to the needs of restructuring (contested decision, OJ, p. 83), the Commission took the view that, apart from the aid, Air France had three ways of improving its financial standing through its own efforts, one of which was to postpone its aircraft orders. Since the company had already postponed a number of orders, further postponement would take the average fleet age beyond 10 years, which was too high for an airline aiming at regaining its competitive strength (contested decision, OJ, p. 85).

102 The reasoning, as thus stated, indicates clearly and unequivocally why the Commission considered that it was vital, in the specific case of Air France, to proceed with the purchase of 17 new aircraft. It includes the grounds of justification regarded by the Commission as being fundamental, namely the need for Air France to have a fleet of a reasonable average age, the fact that the number of aircraft to be acquired was only a fraction of that originally envisaged and the fact that the planned investment would serve to make Air France's fleet more uniform and thus lead to a reduction in operating costs. The Commission thereby provided an adequate response to the first branch of the observations submitted by the parties concerned during the administrative procedure.

103 In the second branch of their observations, the parties concerned classified part of the contested aid as operating aid prohibited by the case-law in so far as it was intended to finance purely operational activities of Air France, namely refurbishing of its fleet aircraft as operating assets.

104 It must be noted in that regard that, in Deufil (cited above in paragraph 79), the Court of Justice approved the Commission's reasoning that investment in normal modernisation intended to maintain an undertaking's competitiveness should be carried out using the undertaking's own financial resources, and not through State aid (paragraphs 16 to 19). In Exécutif Régional Wallon (cited above in paragraph 98), the Court of Justice treated the Commission's line of reasoning - to the effect that investment intended for the renovation and technical modernisation of a production line, which had to be carried out periodically, could not be regarded as designed to facilitate the development of certain economic activities within the meaning of Article 92(3)(c) of the Treaty - as comprehensible and falling within its power of appraisal (paragraphs 31, 32 and 34).

105 Referring to that case-law, the parties concerned pointed out the risk that the amount of aid authorised might become excessive if part of it was not used for Air France's restructuring stricto sensu. In Philip Morris (cited above in paragraph 79, paragraph 17), the Court of Justice ruled that Member States were not entitled to make payments which would improve the financial situation of the recipient undertaking `although they were not necessary for the attainment of the objectives specified in Article 92(3)'.

106 The parties concerned thus raised the possibility of an error of law, namely a breach of the principle of proportionality laid down, with specific reference to State aid, by Article 92(3) of the Treaty. This Court takes the view that it was essential to consider that contention when assessing the aid plan in issue. The Commission was thus under an obligation to reply to it in the grounds of the contested decision.

107 In this connection, the Commission took the view, in the contested decision, that investment in fleet renewal was necessary for the viability of Air France's restructuring (contested decision, OJ, p. 82) and that postponement of orders for new aircraft would take Air France's average fleet age beyond 10 years, a level too high for an airline company aiming at regaining its competitive strength (contested decision, OJ, p. 85). Investment in fleet renewal in an amount of FF 11.5 billion, which features among the `particular ... topics' on which the restructuring plan focused (contested decision, OJ, p. 75), was thus regarded by the Commission as forming an integral part of Air France's restructuring.

108 The Commission confirmed that point of view before the Court by declaring that the acquisition of 17 new aircraft was justified `within the framework of the implementation of the Plan' (point 40 of the rejoinder in Case T-371/94). Moreover, according to the Ernst & Young report submitted by the Commission (Annex 2 to the defence in Case T-371/94), the purchase of the aircraft constituted `... an integral element of its plan to rationalise its fleet ... This investment is a key element of [the] Plan' (point 22 on page 22 of the Report).

GROUNDS CONTINUED UNDER DOC.NUM: 694A0371.1

109 Regarding the detailed arrangements for financing that investment, the contested decision indicates that the implementation of the restructuring plan was to be financed through the increase in capital and sale of non-core assets, from which Air France hoped to realise some FF 7 billion, in particular the sale of a number of aircraft expected to generate some FF 4.1 billion, the sale of spare parts (FF 1.2 billion), a building (FF 0.4 billion) and the Méridien hotel group (contested decision, OJ, p. 76). The contested decision adds that the French authorities gave an undertaking to ensure that, for the duration of the Plan, the aid would be exclusively used by Air France for the purposes of restructuring the company (contested decision, OJ, pp. 78 and 79).

110 In its assessment of the viability of the restructuring plan, the Commission stated that the aid in question was aimed at financing the implementation of the Plan and restructuring the finances of Air France (contested decision, OJ, p. 82). In summary, it was satisfied that the aid granted to Air France was both necessary and proportionate to enable the company to accomplish successfully its restructuring plan and return to viability (contested decision, OJ, p. 86). Finally, condition of authorisation No 6 required the French authorities to ensure `that ... the aid is used exclusively by Air France for the purposes of restructuring the company' (contested decision, OJ, p. 89).

111 As is clear from that reasoning, the contested decision took the view that, while it would serve to reduce Air France's indebtedness, the State aid in dispute was also intended to finance the achievement of the restructuring plan, also financed by the disposal of assets. At the same time, the Commission also considered that investment in fleet renewal was in itself a vital factor in restructuring Air France. It thus appears that the contested decision acknowledged that the aid was intended to finance the fleet investment involving the acquisition of 17 new aircraft. In any event, the decision did not preclude the possibility that the aid might be used, at least in part, for the purpose of financing such investment. The only independent financial means at Air France's disposal designed to contribute to financing this investment, namely the disposal of assets, was expected to realise only FF 7 billion, whereas the costs of the investment in question amounted to FF 11.5 billion.

112 Although such a purchase, accompanied by the disposal of old aircraft, clearly constitutes a modernisation of Air France's fleet, the contested decision did not comment on the relevance, asserted by the parties concerned, of the Deufil and Exécutif Régional Wallon judgments (cited above in paragraphs 79 and 98). The Commission thus failed to specify whether it would tolerate, exceptionally, the financing in question because it considered that case-law to be irrelevant in the specific circumstances of the present context or whether it intended to depart from the actual principle laid down therein.

113 A statement of position by the Commission was all the more necessary in the light of its own decision-making practice reflecting its opposition in principle to all operating aid intended to finance normal modernisation of installations. The Commission considers that investments intended for such modernisation cannot be treated as restructuring and must for that reason be financed out of the own resources of the companies concerned, without any State intervention (Commission Decision 85/471/EEC of 10 July 1985 on an aid granted by the Federal German Government to a producer of polyamide and polypropylene yarn situated in Bergkamen (OJ 1985 L 278, p. 26, at p. 29); Commission Decision 89/228/EEC of 30 November 1988 on Decree-Law No 370/87 of 7 September 1987 of the Italian Government, subsequently converted into Law No 460 of 4 November 1987 on production and marketing, including new standards for the production and marketing of wine sector products (OJ 1989 L 94, p. 38, at p. 41); Commission Decision 92/389/EEC of 25 July 1990 concerning the State aid provided for in Decree-Laws No 174 of 15 May 1989 and No 254 of 13 July 1989 and in draft Law No 4230 regularising the effects produced by the abovementioned Decree-Laws (OJ 1992 L 207 p. 47, at p. 51)).

114 It follows that the grounds of the contested decision do not make it clear that the Commission did in fact examine whether, contrary to the above case-law and its own decision-making practice, the modernisation of the Air France fleet could be partially financed by aid earmarked for restructuring of the company - and, if so, for what reasons.

115 That finding is not invalidated by the details produced before the Court by the French Republic and Air France with regard to the investments in aircraft of FF 11.5 billion envisaged in the restructuring plan. In so far as those interveners have indicated that the amount of FF 11.5 billion was divided into three tranches - FF 7.6 billion for the purchase of 17 aircraft, FF 3 billion for the purchase of spare parts, and FF 0.9 billion for aeronautical work - it is clear that the aeronautical work and the spare parts serve, in the same way as the new aircraft, to modernise the company.

116 Admittedly, the Commission did subsequently argue, during the present proceedings, that the contested aid was intended solely to reduce Air France's indebtedness and not for the purchase of the 17 new aircraft, since fleet investment was to be financed exclusively by Air France's operating profits. However, that reasoning, developed by the Commission's agents before the Court, not only does not feature in the contested decision but is even contradicted by the reasoning therein to the effect that the aid was intended to finance, at least in part, the implementation of the restructuring plan featuring the modernisation of Air France's fleet. As the Court of Justice ruled in its judgment in Case C-137/92 P Commission v BASF and Others [1994] ECR I-2555, paragraphs 66 to 68, the operative part and the statement of reasons of a decision - which must be reasoned under Article 190 of the Treaty - constitute an indivisible whole, with the result that it is for the college of Commissioners alone, in accordance with the principle of collegiate responsibility, to adopt both the one and the other, any alteration to the statement of reasons going beyond simple corrections of spelling or grammar being the exclusive province of that college.

117 Those considerations based on the principle of collegiate responsibility are equally relevant to the decision here under challenge, which also had to be reasoned pursuant to Article 190 of the Treaty and by which the college of Commissioners exercised the discretion reserved to it, to the exclusion of any other body, in the application of Article 92(3) of the Treaty. The arguments presented by the Commission's agents before the Court therefore cannot be upheld (see also, in this connection, Bremer Vulkan, cited above in paragraph 94, paragraphs 47 and 48).

118 The same applies, a fortiori, with regard to the explanations provided before the Court by Air France and the French Republic, intervening in support of the Commission, which argue (i) that it was impossible to cancel or postpone the orders for the 17 new aircraft because they were firm contractual commitments, failure to comply with which would have involved the imposition of penalties, (ii) that, of the 34 aircraft whose resale was envisaged in the restructuring plan, seven were new machines and that the proceeds from their resale would correspond to seven new aircraft not yet acquired, (iii) that of the 17 new aircraft, seven would be immediately resold without being commissioned, and (iv) that the total operating resources of Air France were fixed at FF 19.2 billion in the restructuring plan, thus sufficing to cover the investment expenses involved in fleet renewal. Those assertions are not covered by collegiate responsibility and therefore cannot mitigate the defective reasoning by which the contested decision is vitiated.

119 It might be added, should any further reasoning be necessary, that, assuming them to be admissible, the explanations presented to the Court, to the effect that application of the measures envisaged by the restructuring plan were intended to produce a cash flow enabling Air France to meet its operating and investment costs, are in any event contradicted by the reasoning in the contested decision, from which it is clear that the financial stability and profitability of Air France were not expected to be restored until the end of 1996 (contested decision, OJ, p. 75).

120 It follows from all of the foregoing that the reasons given in the contested decision do not satisfy the requirements of Article 190 of the Treaty in so far as the purchase of 17 new aircraft is concerned.

B - The contention that the Commission wrongly authorised the financing of operating costs and operational measures of Air France

Summary of the parties' arguments

121 The applicants in Case T-371/94 submit that the Commission failed to consider whether the aid was indispensable for the restructuring of Air France, rather than simply necessary to finance the expansion of its operations and the modernisation of its equipment. In their opinion, Article 92(3)(c) of the Treaty does not permit operational aid intended to modernise the operations of its beneficiary.

122 They submit that the only structural costs that will arise from the implementation of the restructuring plan relate to the 5 000 voluntary redundancies, the precise amount attributable to which remains open to debate since the contested decision does not contain any information on that point. The costs which may arise from the other measures envisaged by the restructuring plan should be considered as oper