Commission orders recovery of €33.84 million in incompatible State aid from Blue Air

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The European Commission has concluded that Blue Air’s restructuring plan was not capable of restoring the airline’s long-term viability and it is therefore incompatible with EU State aid rules. Romania must now recover from Blue Air illegal State aid amounting to approximately €33.84 million (RON 163.8 million).

In April 2023, the Commission opened an in-depth investigation 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, in particular with the Guidelines on rescue and restructuring aid to non-financial undertakings in difficulty (the ‘R&R Guidelines’).

Blue Air has been experiencing financial difficulties since 2019. In August 2020, the Commission approved two measures in favour of the airline: (i) an around €28 million (approximately RON 137 million) public guarantee to cover the damage directly caused by the coronavirus outbreak; and (ii) an around €33.84 million (RON 163.8 million) public guarantee 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 2020it 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.

Following its in-depth investigation opened in April 2023, the Commission has 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. This was corroborated by Blue Air’s inability to maintain operations and its request in March 2023 to enter into insolvency proceedings. The restructuring plan has not been updated following the cessation of operations or the opening of the in-depth investigation.

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 €33.84 million (RON 163.8 million) plus interest.

Background

EU State aid rules, more specifically the Guidelines on rescue and restructuring aid, enable Member States to support companies in difficulty, under certain strict conditions. In particular, aid may be granted for a period of up to six months (‘rescue aid’). Beyond this period, the aid must either be reimbursed or Member States must notify a restructuring plan to the Commission, for assessment under the State aid rules. In order for restructuring aid to be approved, the plan must ensure that the viability of the company can be restored without continued State support, that the company contributes sufficiently to the costs of its restructuring and that distortions of competition created by the aid are addressed through compensatory measures, including in particular structural or behavioural measures.

EU State aid rules require that incompatible State aid is recovered in order to remove the distortion of competition created by the aid. There are no fines under EU State aid rules and recovery does not penalise the company in question. It simply restores equal treatment with other companies.

For More Information

The non-confidential version of the decision will be made available under the case number SA.62829 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.

Quote(s)

Public support for companies under difficulties needs 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.

Margrethe Vestager, Executive Vice-President in charge of competition policy