Romania's Senate amended the Government's decree granting state aid to aviation companies by eliminating the EUR 62 million aid for private air carrier Blue Air. Romania's Government has obtained the European Commission's approval for the state aid, which consists of guaranteeing a bank loan for Blue Air.

The Government would guarantee a loan that covers just the company's losses due to the coronavirus crisis, under the scheme approved by the EC.

However, state-owned bank Eximbank, which was supposed to extend the loan, drafted a rather negative report on Blue Air's repayment capacity.

According to Eximbank's analysis, the chances are high that the Government would end up paying for the EUR 62 mln loan from the public budget.

Blue Air's creditworthiness, assessed by EximBank based on the company's financial results at the end of 2019 (before the crisis), is particularly weak - only a D on an A-E scale.

"There is significant uncertainty about the company's ability to continue operating and a high risk of not meeting its financial obligations. The company currently meets the legal requirements to be included in the category of companies in difficulty, as more than half of its subscribed share capital has disappeared due to the accumulated losses," according to EximBank's evaluation.

Blue Air CEO Oana Petrescu sent an open letter to the Romanian Senate, arguing in favor of the state support for her company. The market left free after the potential collapse of Blue Air will be occupied by its main competitor (Budapest-based Wizz Air) and not by Romanian flag carrier Tarom, which is in difficulty itself, Petrescu argued in the letter, quoted by Bursa.

(Photo: Nykolay Bychkov/ Dreamstime)

andrei@romania-insider.com