Ryanair has agreed to repay the €4 million it received in illegal subsidies from the Walloon authorities as part of a deal it negotiated at Charleroi Airport in 2001.
The airline, which is appealing the European Commission's ruling that the incentives it received amounted to illegal state aid, announced that it would pay the refund but said the funds will be held in an account until the appeal is heard.
"If Ryanair is successful in its appeal, these funds along with interest will be returned to Ryanair. If the appeal fails, these funds will be transferred to the Region," it said.
The airline filed its appeal against the ruling with the Court of First Instance in Luxembourg in May. It may not be heard until late 2005. Ryanair has claimed the outcome was a "communist ruling" and is "legally flawed".
Last February the Ryanair chief executive, Mr Michael O'Leary, branded the Commission members as "loonies" and had pledged not to refund the money.
Speaking in Brussels yesterday, Mr O'Leary said he remained confident that the airline would win and said it reserved the right to quit Charleroi if an adverse ruling raised costs. It will maintain operations at their current level until then, he said.
Ryanair had been asked to repay the €4 million by September 15th, but had refused to do so. When asked about the Commission's demand for a refund in September, Mr O'Leary said his reply consisted of two words: "Foxtrot Oscar".
The regional transport minister, Mr Andre Antoine, said he felt "insulted" by this comment and gave Ryanair another month to repay the monies or face court action. Mr O'Leary then refused to acknowledge the demand for payment until it was translated into English.
Ryanair shares rose in Dublin following the announcement. By close of business the shares had gained 17 cent to close at €3.99, up 4.45 per cent.
The Commission is investigating complaints from other airlines which have claimed that Ryanair has received similar subsidies at other airports. The ruling applies to publicly-owned airports which account for about 20 per cent of those used by Ryanair.
Ryanair will announce its half-year figures on Tuesday. The airline has told investors that its yield, or the amount of money earned per passenger, would drop by between 5 and 10 per cent.
Mr O'Leary said the airline's yields were not falling as dramatically as had been expected. "Declining yields, which looked like they might be quite severe, are now not looking so severe," he said yesterday.
