EC probes into the EUR 190 M state aid for Tarom, Romania’s flag carrier

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The European Commission has opened an investigation into Romania’s 190 million euro support measures in favour of Tarom airline, according to a statement published on Monday.

The Commission is probing into whether the restructuring package for the state-owned flag carrier was in line with EU rules on state aid to companies in distress.

Romania eyes to cut costs and renew Tarom’s old fleet by capital injection, through a direct subsidy and a debt write-off corresponding to the amount of rescue aid (approximately EUR 36.7 million) and related interest, the Commission reported, adding the carrier had been experiencing financial difficulties for the past years.

On 28 May 2021, the Romanian authorities notified the Commission of a restructuring plan for TAROM.

Rescue aid may be granted for a period of up to six months. After this period, either the rescue aid must have been reimbursed or the Member State must notify the Commission of a restructuring plan to be assessed in accordance with the State aid rules.

For the restructuring aid to be approved, the plan must ensure that the viability of the undertaking can be restored without further State support, that it contributes to a sufficient extent to the costs of its restructuring and that the distortions of competition generated by the aid are eliminated by means of compensatory measures which include, in particular, structural measures.

At this stage, the Commission has doubts as to whether the restructuring plan and the aid to support it meet the conditions set out in the guidelines.

The Commission’s in-depth investigation will examine whether the proposed restructuring plan is adequate to address TAROM’s difficulties and restore its long-term viability within a reasonable time without further granting State aid.

At the same time, the investigation will verify whether TAROM or market operators would make a sufficient contribution to the restructuring costs, thus ensuring that the restructuring plan is not overly based on public funding and that the aid is proportionate and that the restructuring plan would it was to be accompanied by appropriate measures to limit distortions of competition created by the aid.

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