European authorities to probe Romania’s state aid for Blue Air

The EC is probing whether Romania's state aid to Blue Air was lawful
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The European Commission (EC) announced that it has opened an in-depth investigation into the state aid given by Romania to the now-bankrupt airline Blue Air. 

According to the EC, the Romanian state’s measures to ensure the long-term stability of Blue Air were not in line with the European Union (EU) state aid rules. In a statement, the commission said it will examine whether the airline’s restructuring plan, proposed by the local government, could restore the airline’s “long-term viability without additional or continued State aid”, as well as whether 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”. 

Finally, the EC will also probe whether there were “appropriate measures in place to limit the distortions of competition created by the restructuring aid on the internal market for air transport services”. 

In August 2020, the EC approved two state aid measures for Blue Air, namely an approximate RON137 million (€28 million) public guarantee to cover the damages following the COVID-19-related restrictions and approximately RON164 million (€34 million) “public guarantee on a rescue loan intended to partly cover Blue Air’s liquidity needs for the following six months”. 

Romania committed to making sure that the public guarantee on the loan would be terminated after six months or that it would provide the EC with “either a liquidation plan or a comprehensive restructuring plan for Blue Air”, the statement continued.  

In 2021, the local government put forth a restructuring plan for the airline for the period between August 2020 and September 2025, updating it several times down the line. Romania also extended the duration of the guarantee of the loan to six years, including the six-month period, allowing Blue Air to continuing to repay the loan until 2026. 

However, in November 2022, the state reimbursed the loan and took a 75% shareholding in the airline. 

“At this stage, the Commission has 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 EC concluded.  

Blue Air suspended operations in September 2022. 

Previously, the EC ruled that Italy must recover €400 million ($436.9 million) plus interest from the bankrupt Alitalia, as its state-guaranteed loan to the airline was illegal. 

“Today the Commission has concluded that, when granting the €400 million State aid loan in 2019, Italy did not act like as a private operator would have done, as it did not assess in advance the probability of repayment of the loans, plus interest, but aimed at ensuring the uninterrupted service of Alitalia’s domestic and international flights,” the EC said in an announcement on March 27, 2023. 

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