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Commission approves restructuring aid for airBaltic
State aid: Commission approves restructuring aid for Slovenian airline Adria Airways
The European Commission has concluded that restructuring measures taken by Slovenia in favour of the national airline Adria Airways were in line with EU state aid rules. The Commission found in particular that the company's restructuring plan will enable it to become viable in the long term without unduly distorting competition in the Single Market.
The Commission then assessed whether this aid is compatible with the Commission's 2004 guidelines on state aid for the rescue and restructuring of companies in difficulty (see MEMO/04/172). This assessment has shown that:
- Adria Airways' restructuring plan is based on realistic assumptions and should enable the company to return to long-term viability within a reasonable timeframe;
- the cancellation of scheduled routes, the surrender of slots and reduction of the fleet led to a capacity reduction that will limit the distortions of competition brought about by the aid; and
- Adria Airways will sell several assets, including AAT, in order to bear part of the restructuring costs.
State aid: Commission approves restructuring aid for Latvian airline airBaltic
The European Commission has concluded that a number of measures granted by Latvia in the context of the restructuring of the airline airBaltic in 2011 and 2012 were in line with EU state aid rules. The Commission found, in particular, that airBaltic's restructuring plan will allow the company to become viable in the long term without unduly distorting competition in the Single Market.
The Commission examined a LVL 16 million loan (approx. €22.65 million) granted by Latvia in October 2011, the interest rate of which was substantially reduced in December 2011.
By contrast, the Commission concluded that three other measures were not carried out on market terms. These measures are:
- a second loan granted by Latvia - the first tranche of LVL 41.6 million (approx. €58.89 million) was made available to airBaltic in December 2011; the second tranche of LVL 25.4 million (approx. €35.96 million) in December 2012;
- a capital increase agreed in December 2011 by Latvia and BAS through loan conversions and a cash contribution from BAS, but in which BAS in the end did not participate; and
- a transfer to airBaltic of a €5 million claim held by Latvia in exchange of just LVL 1.
Since these measures do not correspond to what a private investor in a market economy would have accepted, they entail an advantage to airBaltic and therefore state aid. The Commission then assessed whether this aid is compatible with the Commission's 2004 guidelines on state aid for the rescue and restructuring of companies in difficulty (see MEMO/04/172). The Commission found that:
- the restructuring plan submitted by Latvia covering a 5-year period (2011-2016) appears to be a reliable basis for airBaltic's return to long-term viability within a reasonable timescale;
- airBaltic's withdrawal from certain routes and surrender of slots will limit the distortions of competition brought about by the aid; and
- airBaltic contributes to the costs of restructuring by securing several private financial injections and loans and a lease agreement for new aircraft.
State aid: Commission concludes that Scandinavian Airlines (SAS) did not receive state aid
The European Commission has concluded that a Revolving Credit Facility (RCF) that Denmark, Sweden and Norway granted to SAS in December 2012 was carried out on market terms and therefore did not constitute state aid within the meaning of EU rules.
SAS is the major air carrier in Scandinavia. Its four biggest shareholders are Sweden (21.4%), Denmark (14.3%), Norway (14.3%) and the Knut and Alice Wallenberg foundation (KAW) (7.6%). SAS's financial position has been problematic for several years and its financial performance has deteriorated significantly since 2008.
In recent years, SAS has been enjoying an RCF provided by several banks, which should originally have expired in June 2013. The banks refused to renew this RCF without a substantial participation from Denmark, Sweden and Norway. In December 2012, the three States decided to finance half of a new RCF of SEK 3.5 billion (around €400 million), together with KAW and the majority of the banks that participated in the old RCF. The measure is linked to the implementation of SAS's new business plan.
The Commission opened an in-depth investigation in June 2013 to assess the conformity of the new RCF with EU state aid rules (see IP/13/567). Under EU rules, a public support measure does not constitute state aid if it was concluded on terms that a private player operating under market conditions would have accepted (the market economy investor principle).
In its investigation, the Commission found that the three states and the banks were not in a comparable position when deciding to participate in the new RCF, in particular in view of the exposure of some of the banks towards SAS beyond the RCF. However, the investigation has also established the robustness of the underlying assumptions of the business plan. Indeed, the plan has been reviewed by external advisers who confirmed its credibility. The plan is therefore an economically reasonable basis for the three States' decision to participate in the new RCF. Moreover, the risks taken by the States were further reduced as the collateral of the new RCF was sufficient.
On this basis, the Commission reached the conclusion that the new RCF was concluded on terms that a private investor operating under market conditions would have accepted. It therefore procured no undue economic advantage to SAS and did not entail state aid. The new RCF was never used and was effectively cancelled on 4 March 2014.
La Commissione ha già adottato decisioni riguardanti Air Malta (cfr. IP/12/702), e Czech Airlines
Commission approves restructuring aid for airBaltic
State aid: Commission approves restructuring aid for Slovenian airline Adria Airways
The European Commission has concluded that restructuring measures taken by Slovenia in favour of the national airline Adria Airways were in line with EU state aid rules. The Commission found in particular that the company's restructuring plan will enable it to become viable in the long term without unduly distorting competition in the Single Market.
The Commission then assessed whether this aid is compatible with the Commission's 2004 guidelines on state aid for the rescue and restructuring of companies in difficulty (see MEMO/04/172). This assessment has shown that:
- Adria Airways' restructuring plan is based on realistic assumptions and should enable the company to return to long-term viability within a reasonable timeframe;
- the cancellation of scheduled routes, the surrender of slots and reduction of the fleet led to a capacity reduction that will limit the distortions of competition brought about by the aid; and
- Adria Airways will sell several assets, including AAT, in order to bear part of the restructuring costs.
State aid: Commission approves restructuring aid for Latvian airline airBaltic
The European Commission has concluded that a number of measures granted by Latvia in the context of the restructuring of the airline airBaltic in 2011 and 2012 were in line with EU state aid rules. The Commission found, in particular, that airBaltic's restructuring plan will allow the company to become viable in the long term without unduly distorting competition in the Single Market.
The Commission examined a LVL 16 million loan (approx. €22.65 million) granted by Latvia in October 2011, the interest rate of which was substantially reduced in December 2011.
By contrast, the Commission concluded that three other measures were not carried out on market terms. These measures are:
- a second loan granted by Latvia - the first tranche of LVL 41.6 million (approx. €58.89 million) was made available to airBaltic in December 2011; the second tranche of LVL 25.4 million (approx. €35.96 million) in December 2012;
- a capital increase agreed in December 2011 by Latvia and BAS through loan conversions and a cash contribution from BAS, but in which BAS in the end did not participate; and
- a transfer to airBaltic of a €5 million claim held by Latvia in exchange of just LVL 1.
Since these measures do not correspond to what a private investor in a market economy would have accepted, they entail an advantage to airBaltic and therefore state aid. The Commission then assessed whether this aid is compatible with the Commission's 2004 guidelines on state aid for the rescue and restructuring of companies in difficulty (see MEMO/04/172). The Commission found that:
- the restructuring plan submitted by Latvia covering a 5-year period (2011-2016) appears to be a reliable basis for airBaltic's return to long-term viability within a reasonable timescale;
- airBaltic's withdrawal from certain routes and surrender of slots will limit the distortions of competition brought about by the aid; and
- airBaltic contributes to the costs of restructuring by securing several private financial injections and loans and a lease agreement for new aircraft.
State aid: Commission concludes that Scandinavian Airlines (SAS) did not receive state aid
The European Commission has concluded that a Revolving Credit Facility (RCF) that Denmark, Sweden and Norway granted to SAS in December 2012 was carried out on market terms and therefore did not constitute state aid within the meaning of EU rules.
SAS is the major air carrier in Scandinavia. Its four biggest shareholders are Sweden (21.4%), Denmark (14.3%), Norway (14.3%) and the Knut and Alice Wallenberg foundation (KAW) (7.6%). SAS's financial position has been problematic for several years and its financial performance has deteriorated significantly since 2008.
In recent years, SAS has been enjoying an RCF provided by several banks, which should originally have expired in June 2013. The banks refused to renew this RCF without a substantial participation from Denmark, Sweden and Norway. In December 2012, the three States decided to finance half of a new RCF of SEK 3.5 billion (around €400 million), together with KAW and the majority of the banks that participated in the old RCF. The measure is linked to the implementation of SAS's new business plan.
The Commission opened an in-depth investigation in June 2013 to assess the conformity of the new RCF with EU state aid rules (see IP/13/567). Under EU rules, a public support measure does not constitute state aid if it was concluded on terms that a private player operating under market conditions would have accepted (the market economy investor principle).
In its investigation, the Commission found that the three states and the banks were not in a comparable position when deciding to participate in the new RCF, in particular in view of the exposure of some of the banks towards SAS beyond the RCF. However, the investigation has also established the robustness of the underlying assumptions of the business plan. Indeed, the plan has been reviewed by external advisers who confirmed its credibility. The plan is therefore an economically reasonable basis for the three States' decision to participate in the new RCF. Moreover, the risks taken by the States were further reduced as the collateral of the new RCF was sufficient.
On this basis, the Commission reached the conclusion that the new RCF was concluded on terms that a private investor operating under market conditions would have accepted. It therefore procured no undue economic advantage to SAS and did not entail state aid. The new RCF was never used and was effectively cancelled on 4 March 2014.
La Commissione ha già adottato decisioni riguardanti Air Malta (cfr. IP/12/702), e Czech Airlines