The European Commission has opened an in-depth investigation to assess whether certain Romanian support measures in favour of the airline Blue Air Aviation (Blue Air) are in line with EU State aid rules.
Background
The Romanian airline Blue Air has been experiencing financial difficulties since 2019. In March 2020, like many other companies operating in the aviation sector, it was seriously hit by the coronavirus pandemic.
In November 2022, Blue Air ceased operations as the Romanian authorities temporarily suspended its operating license due to its financial situation.
EU Commission support
In August 2020, the EU Commission approved two measures in favour of Blue Air, namely:
- An approximate €28 million public guarantee to compensate for the damages resulting from the coronavirus pandemic and the travel restrictions imposed by Romania and other countries to limit the spread of the virus; and
- an approximate €34 million public guarantee on a rescue loan intended to partly cover Blue Air’s liquidity needs for the following six months.
Romania’s undertaking
For its part, Romania then committed to ensure that the public guarantee on the rescue loan would be terminated after six months.
Alternatively, it would communicate either a liquidation plan or a comprehensive restructuring plan for Blue Air to the Commission for State aid assessment.
In April 2021, Romania communicated to the Commission a restructuring plan for Blue Air covering the period between August 2020 and September 2025.
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The plan has since been updated several times and includes an extension of the duration of the guarantee on the rescue loan to six years.
In November 2022, Romania reimbursed the loan and took a 75% shareholding in Blue Air.
Current EU Commission concerns
At this stage, the Commission has expressed its concerns that the restructuring plan and the aid measures implemented to support this plan are not line with EU State aid rules, in particular with the Guidelines on rescue and restructuring aid.
The Commission will now carry out an in-depth investigation to determine whether its initial concerns are confirmed. In particular, the Commission will examine whether:
- the restructuring plan can restore Blue Air’s long-term viability without additional or continued State aid;
- Blue Air’s own or market contributions to the restructuring costs are sufficient, real, actual and free of any aid, so as to ensure that the restructuring aid is proportionate; and
- there are appropriate measures in place to limit the distortions of competition created by the restructuring aid on the internal market for air transport services.
The opening of an in-depth investigation gives Romania and interested third parties, including the beneficiary of the aid, the opportunity to submit comments. It does not prejudge in any way the outcome of the investigation.
About Blue Air
Blue Air operated as a Romanian low-cost carrier and was based in Bucharest operating scheduled flights to destinations across Europe and the Middle East. The airline was founded in 2004 and began operations in December of that year.
The carrier’s fleet consisted mainly of Boeing 737 aircraft, with some Airbus A320s and Boeing 737 MAXs. As of 2021, the airline was operating flights to over 100 destinations across Europe and the Middle East, including cities such as London, Paris, Rome, Tel Aviv, and Dubai.
