EC begins in-depth investigation on EUR 190 mln state aid for RO airline Tarom

The European Commission (EC) has opened an in-depth investigation to assess whether Romania's plans to support the restructuring of the airline TAROM with around EUR 190 million of public funding would be in line with EU rules on State aid to companies in difficulty. At this stage, the Commission has doubts that the proposed restructuring plan and the aid to support it satisfy the conditions of the Guidelines.

The Romanian competition body quoted by News.ro argues that the in-depth investigation is a procedural stage and that particularly now when similar decisions of the Commission were challenged [by independent airlines], the requests are treated with increased attention.

The Commission's in-depth investigation will, in particular, examine whether the proposed restructuring plan is appropriate for restoring its long-term viability without continued state aid. The Commission will also assess whether TAROM would sufficiently contribute to the restructuring costs. And finally, whether appropriate measures to limit the distortions of competition created by the aid would accompany the restructuring plan.

Romanian state-owned flag carrier TAROM has been experiencing financial difficulties for years. It has received a temporary rescue loan from Romania of approximately EUR 36.7 mln, after approval by the Commission under EU State aid rules in February 2020.

On 28 May 2021, Romania notified to the Commission a plan for the restructuring of TAROM. The restructuring plan sets out a package of measures for streamlining TAROM's operations, renewing its ageing fleet and reducing costs.

Romania plans to support the restructuring with around EUR 190 mln of public funding. This support would take the form of a capital injection, a direct subsidy, and a debt write-off of the rescue aid amount (approximately EUR 36.7 mln) and its related interest.

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