The European Commission (EC) has opened a detailed investigation to assess whether certain support measures taken by Romania in favour of Blue Air Aviation, specifically the guarantees for a EUR 34 mln rescue loan extended in August 2020 and its renewal, comply with EU state aid rules, G4media.ro reported.

Specifically, such a detailed investigation assesses whether the troubled company is likely to become viable after the restructuring plan as notified to the Commission.

The Romanian state accepted a 75% stake in Blue Air in exchange for repaying the EUR 62 mln bank loans previously guaranteed under the state-aid schemes. But instead of assets, the state ended up with more liabilities (around EUR 200 mln), which was probably not part of the restructuring plan. The state eventually filed for the company’s bankruptcy in March 2023.

It is uncertain whether the recovery plan notified by Romania to the EC included such developments, but most likely not.

The investigation also evaluates the support the target company receives from the free market (banks, other investors) as part of the restructuring plan and whether the support measures provided by the state distort the competition in the market. Both elements are far from the classic state aid scheme.

In August 2020, the EC cleared two public support measures for Blue Air, namely guarantees for a EUR 28 mln loan to compensate for the effects generated by the Covid-19 crisis and a EUR 34 mln rescue loan.

After six months, the state should have either reported the termination of the guarantees or drafted a liquidation / comprehensive restructuring plan.

In April 2021, Romania communicated for the first time to the Commission a plan to restructure Blue Air for the period August 2020 – September 2025. The plan, updated several times, includes an extension of the rescue loan guarantee to six years, thus allowing for the repayment of the aid until 2026, provides for restructuring measures and envisages private financing. In November 2022, the Romanian State accepted a 75% stake in Blue Air in exchange for the loans guaranteed for the company.

(Photo: Anton Volynets/ Dreamstime)

andrei@romania-insider.com