EC approves EUR 95 mln updated restructuring plan for Romania's Tarom

The European Commission (EC) approved on April 29 the restructuring plan for the Romanian flag carrier Tarom, in a total amount of EUR 95 million now, updated by Romania in line with the Commission recommendations.

Under the plan, Tarom will be written off the state aid received in 2020 and will get funds to renew its fleet, but it will have to optimize the routes operated and the commercial policies while further reducing personnel, Romanian transport minister Sorin Grindeanu commented, quoted by Economica.net.

"The Romanian restructuring aid approved today will help maintain regional connectivity of Romanian citizens and businesses. Following our in-depth investigation, we concluded that Tarom's restructuring plan will ensure that the airline becomes viable in the long term. To limit any possible competition distortions triggered by public support, Tarom will significantly downsize its number of routes and aircraft," said Margrethe Vestager, Executive Vice-President in charge of competition policy.

The plan includes the renewal of its aging fleet and the reduction of costs.

Tarom will make a significant own contribution of around EUR 77.7 million in the form of proceeds from aircraft sale and a finance lease concluded at market terms.

The EC decided safeguards are necessary to limit distortions of competition: the reduction of the number of routes that Tarom operates, as well as the number of aircraft, and maintaining such reduced capacity, thereby limiting its market presence for the entire duration of the restructuring period (until December 31, 2026.)

Initially filed by Romania in May 2021, the plan was updated to address the concerns raised by the EC during the in-depth investigation. The notified restructuring measures now include a debt write-off of around EUR 49.5 million corresponding to the rescue aid amount, approved by the Commission in February 2020, plus interest, and a capital injection of around EUR 45.8 million.

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