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Commission approves €62 million Romanian loan guarantee to compensate Blue Air for damage suffered due to #Coronavirus outbreak and provide the airline with urgent liquidity support

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The European Commission has approved, under EU state aid rules, a Romanian loan guarantee of up to around €62 million (approximately RON 301m) in favour of Romanian airline Blue Air. Blue Air is a private Romanian airline with bases in Romania, Italy and Cyprus. It qualified as a company in difficulty before the coronavirus outbreak, i.e. on 31 December 2019. More specifically, the company was loss making due to the extensive investments it undertook since 2016 to improve its network of routes. The airline had returned to profitability in 2019 and early 2020, but it suffered significant losses due to the coronavirus outbreak.

The measure consists of a public guarantee of up to around €62m on a loan to the airline which will be allocated as follows: (i) around €28m public guarantee to compensate Blue Air for the damage directly caused by the coronavirus outbreak between 16 March 2020 and 30 June 2020; and (ii) around €34m rescue aid in the form of a public guarantee on a loan intended to partly cover Blue Air's acute liquidity needs as a result of the high operating losses it has been experiencing following the coronavirus outbreak. Blue Air is not eligible to receive support under the Commission's State aid Temporary Framework, aimed at companies that were not already in difficulty on 31 December 2019.

The Commission therefore has assessed the measure under other State aid rules, in line with the notification by Romania. With respect to the damage compensation, the Commission assessed the measure under Article 107(2)(b), which enables the Commission to approve state aid measures granted by member states to compensate specific companies for the damages directly caused by exceptional occurrences, such as the coronavirus outbreak.

As regards the rescue aid, the Commission assessed it under the Commission's 2014 Guidelines on state aid for rescue and restructuring, which enable member states to support companies in difficulty, provided, in particular, that the public support measures are limited in time and scope and contribute to an objective of common interest. The Commission therefore concluded that the Romanian measure is in line with EU state aid rules.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The aviation sector has been severely hit by the coronavirus outbreak. This €62m Romanian loan guarantee will in part enable Romania to compensate Blue Air for the damage suffered as a result of the coronavirus outbreak. At the same time, it will provide the airline with the necessary resources to address part of its urgent and immediate liquidity needs. This will avoid disruptions for passengers and ensure regional connectivity in particular for the significant number of Romanian citizens working abroad and for many small local businesses that depend on affordable tickets offered by Blue Air on a network of routes aimed at addressing their specific needs. We continue working with member states to discuss possibilities and find workable solutions to preserve this important part of the economy in line with EU rules.”

A full press release is available online.

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