COVID-19: European Commission authorises EUR 19.3 million Romanian state-guaranteed loan to Tarom

Available languages: FR

On 5 October 2020, the European Commission authorised the granting of a public loan guaranteed by the Romanian State for an amount of EUR19.3 million in favour of Tarom. The airline had already received rescue aid in February 2020.

The current COVID-19 crisis is not likely to improve the airline’s situation. Between mid-March and the end of June, the airline suffered substantial operating losses as a result of the containment and travel restriction measures in many destination countries. In this context, the Commission has once again authorised the Romanian State to financially support the company.

The aid takes the form of a public loan guaranteed by the State for an amount of EUR 19.3 million and is based on Article 107(2)(b) TFEU. As a reminder, the Article constrains the Commission to declare compatible with the internal market "aid to make good the damage caused by natural disasters or exceptional occurrences". In this respect, the Commission considers that the coronavirus pandemic constitutes an "exceptional occurrence" because of its exceptional and unpredictable nature and its significant impact on the economy. Several compensation payments for the damage caused by the pandemic have already been notified and approved by the Commission, for instance for the airlines Condor, SAS and Alitalia.

In this case, the Commission found in particular that the Romanian measure will compensate damage that is directly linked to the coronavirus outbreak. An independent external audit firm will verify that the aid does not exceed the amount of damage suffered during the period between 16 March and 30 June 2020. Following the audit, any public support received by Tarom in excess of the actual damage suffered will have to be returned to Romania, thus avoiding any risk of overcompensation. The Commission also found that the measure is proportionate as the compensation does not exceed what is necessary to make good the damage. On this basis, the Commission concluded that the Romanian measure is in line with EU State aid rules.

It should be remembered that, since the start of the crisis, many airlines have benefited from support measures from their respective States on the basis of the Temporary Framework in different forms: (i) recapitalisation for Deutsche Lufthansa, Brussels Airlines, airBaltic and Finnair; (ii) compensation for damage caused by COVID-19 for Swedish airlines, French airlines and Condor; and (iii) rescue aid for the TAP and SATA airlines. Aid granted to airlines must, in all cases, be notified in advance to the European Commission for formal authorisation.

In addition, the European Commission recently decided to extend the Temporary Framework on State Aid until 30 June 2021, except for recapitalisation measures, which can be implemented until 30 September 2021. New public support measures in favour of airlines should therefore be adopted in the coming weeks, as the aviation sector is one of the hardest hit by the crisis and urgently requires support.