UPDATE 1-EU tells Ryanair to pay back French aid

Wed Jul 23, 2014 7:47am EDT

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(Adds Ryanair to appeal)

BRUSSELS, July 23 (Reuters) - Irish low-cost carrier Ryanair must repay about 10 million euros ($13.47 million) in illegal state aid it received from France for operating at three small regional airports, European Union regulators said on Wednesday.

The European Commission said the French support, which consisted of contractual rebates and airport and marketing deals, gave the world's biggest budget airline an unfair advantage.

Ryanair said it would appeal the "erroneous" decision.

The EU competition watchdog said Ryanair would have to pay back about 6.4 million euros related to aid received for operating at Nimes Airport, the subject of an Air France complaint.

Ryanair will also have to return 2.4 million euros in aid connected to Pau Pyrenees Airport and about 868,000 euros related to Angouleme Airport.

The airline said in a statement that the airports in question had carried a total of 3.4 million passengers, compared to 86.5 million passengers at seven other airports where commercial arrangements had been questioned but ultimately approved.

Ryanair, whose success in securing lucrative deals from small regional airports was a key factor in its growth to becoming the largest international carrier in Europe, said the ruling would not impact its expansion plans.

The EU ruling also ordered Air France's low cost subsidiary Transavia to pay back 400,000 euros in aid related to marketing and airport service deals at Pau Pyrenees Airport.

The Commission broadened its investigation into financial deals at Austria's Klagenfurt Airport, saying these seemed to be excessively favourable to Ryanair.

But it cleared state aid granted to Germany's Dortmund, Leipzig/Halle and Niederrhein-Weeze airports as they complied with the rules.

($1 = 0.7426 Euros) (Reporting by Foo Yun Chee in Brussels and Conor Humphries in Dublin; editing by Adrian Croft and Elaine Hardcastle)

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