The European Commission orders Romania to recover from Blue Air EUR 34M incompatible state aid, declared illegal

By Romania Journal Last updated Feb 16, 2024

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Blue Air received state aid during the pandemic, and now the European Commission “orders the recovery”, these are the words used by the European Executive.

According to the cited source, the EC concluded that Blue Air’s restructuring plan was unable to restore the airline’s long-term viability and was therefore incompatible with EU state aid rules.

Romania must now recover from Blue Air an illegal state aid amounting to approximately 33.84 million euros (163.8 million lei).

The release recalls that in April 2023, the Commission launched a detailed investigation to assess whether a restructuring plan for the airline Blue Air and the aid measures implemented in support of the plan complied with EU State aid rules, specifically the State Aid Guidelines for rescuing and restructuring non-financial enterprises in difficulty (“Rescue and Restructuring Guidelines”).

Blue Air has been facing financial difficulties since 2019.

In August 2020, the Commission approved two measures in favor of the airline:

a public guarantee of approximately EUR 28 million (approximately RON 137 million) to cover damages directly caused by the coronavirus pandemic;
a public guarantee of approximately EUR 33.84 million (RON 163.8 million) related to a rescue loan, intended to partially cover Blue Air’s liquidity needs in the next six months.

Romania agreed that, should the public guarantee related to the bailout loan not terminate six months after the first aid payment which took place in October 2020, to communicate to the Commission either a liquidation plan or a comprehensive plan restructuring of Blue Air. In April 2021, Romania communicated a restructuring plan that was then updated several times.

In November 2022, the Romanian state repaid the loan and took a 75% stake in Blue Air after the airline suspended its operations in September 2022.

“Following its in-depth investigation launched in April 2023, the Commission concluded that Blue Air’s restructuring plan was not feasible, coherent and sufficiently extensive to restore the airline’s long-term viability within a reasonable time and without distorting the unfairly compete in the single market. This conclusion was corroborated by Blue Air’s inability to maintain its activity and its request, in March 2023, to open insolvency proceedings. The restructuring plan was not updated either following the cessation of activity or the initiation of the in-depth investigation,” says the EC.

The European executive also says that measures supporting an inadequate and unrealistic restructuring plan, which is not backed by sufficient market funding from investors after the bailout period, are illegal under EU state aid rules.

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