The European Commission has approved a bailout of Air France by the French state, worth up to €4 billion.

The group said the Dutch state is continuing discussions with the EC regarding potential capital-strengthening measures for KLM.

However, Sky News reported that Ryanair – Europe’s largest low-cost airline – warned that the state bailout of Air France will “damage competition in the air transport market for decades to come”.

In return for the funding, Air France will relinquish 18 take-off and landing slots at Paris-Orly airport, about 4% of its allocation there.

Sky News said the reallocation of the slots will be restricted to aircraft based at Orly with crews employed on local contracts, “a move that would freeze out many low-cost competitors”.

Ryanair told Sky News: “This latest tranche of state aid to Air France combined with these ineffective remedies will damage competition in the air transport market for decades to come.

“The 18 slots that Air France is being required to make available is nowhere near enough to allow others to offer a competitive challenge to Air France’s dominance at Paris Charles de Gaulle and Paris-Orly airports.”

EasyJet chief executive Johan Lundgren told Sky’s Ian King Live programme: “I’m not against aid as such, because to some extent this (the pandemic) has gone way beyond what you can expect the industry to deal with.

“I think it’s the scale and the billions and billions being pumped into some of the legacy airlines out there.

“If that money and funds are not there purely to survive but actually to grow market share and take advantages and for investment that they otherwise couldn’t afford, that’s not fair and that distorts the level playing field and we can be very mindful to make the competition authorities aware of that.”

Anne-Marie Couderc, chair of Air France-KLM, said: “[The] announcement demonstrates both the strong commitment of the French state and the renewed support of the Dutch state to help the group weather this pandemic and this crisis.”

Benjamin Smith, group chief executive, added: “These first recapitalisation measures are an important milestone for our group in this exceptionally challenging period.

“They will provide Air France-KLM with greater stability to move forward when recovery starts, as large-scale vaccination progresses around the world and borders reopen.”

The group expects the operating loss for the first quarter of 2021 to be about €1.3 billion.

Margrethe Vestager, the EC’s executive vice-resident in charge of competition policy, said: “France will contribute up to €4 billion to reinforce Air France’s equity and help the airline face financial difficulties resulting from the coronavirus outbreak.

“At the same time, the public support will come with strings attached, in particular to ensure the French state is sufficiently remunerated, and further measures to limit distortions of competition.

“In particular, Air France has committed to make available slots at the congested Paris Orly airport, where Air France hold significant market power. This gives competing carriers the chance to expand their activities at this airport, ensuring fair prices and increased choice for European consumers.”