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Last Updated: Thursday, 28 October, 2004, 16:18 GMT 17:18 UK
Ryanair to repay illegal subsidy
Michael O'Leary, Ryanair chief executive
Michael O'Leary initially said the subsidies would not be repaid
Budget airline Ryanair will repay the 2.8m (4m euros; $5.1m) in illegal subsidies it got to encourage it to stay at Charleroi airport in Belgium.

The cash will go into an escrow account until its appeal against a repayment order is heard in the European Court.

In February, EU competition officials ordered Ryanair to repay the money to the southern Belgian Walloon region.

If it wins its appeal, the funds plus interest will go to Ryanair, otherwise they will go to Walloon authorities.

'Ordinary consumers'

The European Commission ruled earlier this year that discounts on landing fees and ground handling services at the publicly-owned airport near Brussels should be repaid because they could be classified as illegal subsidies under European Union anti-trust rules.

Ryanair is challenging the decision and has said setting up and maintaining a base at Charleroi, at a cost of 40m euros, exceeded any discount it got from the Walloon region.

In May, Ryanair chief executive Michael O'Leary said he would refuse to pay and filed an appeal to the European Court of First Instance. In September, the Belgian government had told Ryanair it must repay 4m euros within a month.

The no-frills carrier said it was confident the court would overturn the Commission's decision.

It can take the court up to two years to make a decision in these types of cases.

Ryanair head of communications, Paul Fitzsimmons, said the partnership had "enabled millions of ordinary consumers to fly at Europe's lowest fares and encouraged the development of unused, empty secondary regional airports, at Brussels Charleroi, and throughout Europe".

The authorities in Charleroi, a region of high unemployment south of Brussels, have been concerned about the economic impact on the local community should Ryanair no longer use the destination.

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