Blue Air received state aid during the pandemic, and now the European Commission is “ordering it to resume,” according to the European executive.

According to the cited source, the EC concluded that Blue Air’s restructuring plan failed to restore the airline’s long-term viability and was therefore incompatible with EU state aid rules.

Romania must now recover illegal state aid from Blue Air in the amount of approximately 33.84 million euros (163.8 million lei).

The release recalls that in April 2023 the Commission opened a detailed investigation to assess whether Blue Air’s restructuring plan and the aid measures introduced to support the plan comply with EU state aid rules, in particular the Directive on State aid for the rescue and restructuring of non-financial undertakings , which are in a difficult situation (“Recommendations on rescue and restructuring”).

Blue Air has been facing financial difficulties since 2019.

In August 2020, the Commission approved two measures in favor of the airline:

1. state guarantee in the amount of approximately 28 million euros (approximately 137 million lei) to cover losses directly caused by the coronavirus pandemic

2. a state guarantee in the amount of approximately EUR 33.84 million (163.8 million lei) related to the rescue loan intended to partially cover Blue Air’s liquidity needs over the next six months.

Romania agreed to notify the Commission of either a liquidation plan or a comprehensive restructuring plan for Blue Air if the state guarantee linked to the loan does not expire six months after the first bailout, which took place in October 2020.

In April 2021, Romania presented a restructuring plan, which was then updated several times. In November 2022, the Romanian state repaid the loan and acquired a 75% stake in Blue Air after the airline suspended operations in September 2022.

“Following its in-depth investigation launched in April 2023, the Commission concluded that Blue Air’s restructuring plan was not feasible, coherent and sufficiently extensive to restore the airline’s long-term viability within a reasonable time and without distorting unfair competition in the single market. . This conclusion was supported by Blue Air’s failure to sustain operations and its March 2023 filing for bankruptcy. The restructuring plan was not updated either after the termination of operations or after the initiation of an in-depth investigation,” the EC said in a statement.

The European executive also says measures that support an inadequate and unrealistic restructuring plan that is not backed by sufficient market funding from investors after the bailout period are illegal under EU state aid rules.

Romania must now recover illegal state aid of 33.84 million euros (163.8 million lei) from Blue Air, plus interest.

See also:

State aid to “Tarom” and “Blue Air”: what the two companies are prohibited from doing and what amounts are guaranteed

The European Commission is launching a detailed investigation into the support measures provided by Romania to Blue Air