European Commission authorises recapitalisation measure in favour of Air Belgium

The European Commission has approved a recapitalisation measure of EUR 4.8 million in favour of Air Belgium as compensation for the damage suffered by the airline during the period from 14 March to 30 June 2020, due to the pandemic of COVID-19 and travel restrictions imposed by many states.

On 25 June 2021, the European Commission approved an aid measure from Belgium in favour of the airline company Air Belgium in the context of the COVID-19 crisis.

Like many other players in the airline industry, the company has suffered a significant loss of traffic and exploitation due to the COVID-19 pandemic and the travel restrictions that states have put in place to limit its spread.

The aid of EUR 4.8 million is intended to compensate the company for the damage it suffered as a result of these travel restrictions during the period from 14 March to 30 June 2020. It is granted in the form of 'a capital injection, financed by the three public shareholders of the company, namely the SRIW (société régionale d’investissement de Wallonie), the Sogepa (société wallonne de gestion et participations) and the SFPI (société fédérale de participations et d’investissement).

Belgium has notified the proposed aid on the basis of Article 107.2 b) TFEU, which requires the Commission to declare compatible with the internal market aid intended to remedy damage caused by natural disasters or by other exceptional occurrences.

The crisis linked to the COVID-19 pandemic was considered by the Commission as such an occurrence, due to its exceptional and unpredictable nature and its major repercussions on the economy.

In this case, the Commission considered that the aid measure proposed by Belgium satisfied the conditions of Article 107.2 b) TFEU. In particular, the aid will only compensate for the damage directly suffered by Air Belgium as a result of the pandemic and will not exceed what is necessary to repair this damage.

It is worth highlighting that many other airlines, such as SAS, Finnair, Condor, Blue Air, Alitalia, Tarom or even Aegean Airlines, have received State aid measures on the basis of Article 107.2 b) TFEU for the damage they suffered as a result of the pandemic, as well as several airport operators (see in this regard in particular our articles of 16 March and 25 May 2021).

It is also worth mentioning that the airline Ryanair has brought numerous actions before the EU General Court against the aid approved by the Commission.

The EU General Court dismissed the majority of the Irish company’s appeals but recently upheld several, notably the one against the Commission decision authorising aid in favour of Condor, approved by the Commission on the basis of Article 107.2 b) TFEU. This aid, amounting to EUR 500 million, was granted in the form of two subsidised public loans guaranteed by Germany. On 9 June 2021, the General Court annulled the Commission’s decision for lack of reasoning and invited it to adopt a new, better reasoned decision (see in this regard our article of 24 June 2021).

Let also recall the judgment of the EU General Court of 19 May 2021 annulling the Commission decision approving the Dutch aid in favour of KLM, on appeal by Ryanair. The aid was granted to the company in the form of a guarantee and a state loan of EUR 3.4 billion, on the basis of the Temporary Framework for State aid measures to support the economy in the current the COVID-19 outbreak. The General Court considered that the Commission had not sufficiently motivated its decision and failed to take into account several important elements concerning the shareholders of KLM and its links with the company Air France (for more information see our article of 1 June 2021).