The European Commission (EC) said on February 16 that Romania must recover from Blue Air illegal state aid amounting to roughly EUR 33.84 million (RON 163.8 million), as the restructuring plan failed to restore the airline’s long-term viability and is therefore incompatible with EU state aid rules.
The Commission’s order was issued following an in-depth investigation started in April 2023 to assess whether a restructuring plan for Blue Air and the aid measures implemented to support this plan were in line with EU state aid rules.
Blue Air has been struggling with financial problems since 2019. In August 2020, the EC approved two measures in favor of the airline, namely an around EUR 28 million public guarantee to cover the damage directly caused by the coronavirus outbreak and another public guarantee of some EUR 33.84 million on a rescue loan intended to partly cover Blue Air’s liquidity needs for the following six months.
“Romania agreed that if the public guarantee on the rescue loan was not terminated after six months from the first aid payment, which took place in October 2020, it would submit either a liquidation plan or a comprehensive restructuring plan for Blue Air to the Commission. In April 2021, Romania submitted a restructuring plan, which was subsequently up-dated several times. In November 2022, Romania reimbursed the loan and took a 75% shareholding in Blue Air after the airline suspended operations in September 2022,” reads the EU Commission’s press release.
The EC opened an in-depth investigation into the aid and concluded that “the restructuring plan for Blue Air was not feasible, coherent and sufficiently far-reaching to restore the airline’s long-term viability within a reasonable timeframe and without unduly distorting competition in the single market.”
Moreover, Blue Air could not maintain operations, requesting in March 2023 to enter insolvency proceedings.
“Measures to support an inadequate and unrealistic restructuring plan that is not backed by sufficient market funding from investors beyond the rescue period are illegal under EU State aid rules. Romania must now recover from Blue Air the unlawful State aid amounting to EUR 33.84 million (RON 163.8 million) plus interest,” the European Commission said.
Margrethe Vestager, Executive Vice-President in charge of competition policy, commented: “Public support for companies under difficulties needs to be backed up by viable plans to ensure that the restructuring is successful without unduly distorting competition. After an in-depth investigation, we have confirmed that the restructuring plan and the measures implemented for Blue Air are not in line with EU State aid rules. Romania must now recover the aid to restore competition in the internal market for air transport services.”
irina.marica@romania-insider.com
(Photo source: Anton Volynets/Dreamstime.com)
