Aviation Romania

Romania ordered to repay Blue Air’s state aid

| 2024-02-18 2 min read

Romania ordered to repay Blue Air’s state aid

Reading Time: 2 minutes

Blue Air’s restructuring plan has failed to restore its long-term viability and the Romanian state must return the EUR 33.84mn it gave to the Romanian airline during the pandemic, as it was incompatible with EU state aid rules, the European Commission (EC) announced. 

Romania bailed out struggling airline in 2020

In August 2020, the EC approved two public-guarantees measures in favour of Blue Air: one for RON 137mn (EUR 28mn) for COVID:19-related damages and another for RON 163.8mn ( EUR 33.84mn) to aid Blue Air’s liquidity over the next 6 months. 

Romania agreed that, if the rescue loan did not terminate after six months from the first payment (in October 2020), it would suggest to the EC either a liquidation plan or a comprehensive restructuring of the airline. 

In April 2021, Romania communicated a restructuring plan, which was then updated several times. Blue Air suspended activities in September 2022, and 2 months later Romania repaid the loan and took a 75% stake in the airline. 

EC probe rules for repayment of aid

The EC launched an investigation last April into the plan to restructure Blue Air and its compliance with state aid guidelines for the rescue and restructuring of non-financial enterprises. 

It concluded that Blue Air’s restructuring plan was not feasible, coherent or broad enough to restore the airline’s long-term viability within a reasonable period and without unduly distorting competition in the single market, and ordered the recovery of the EUR 33.84mn plus interest.

The EC wrote “EU state aid rules require the recovery of incompatible state aid in order to eliminate the distortion of competition caused by the aid. EU state aid rules do not provide for the imposition of fines, and the purpose of recovery is not to penalise the company in question, but simply to restore equality of treatment with other companies,” the EC statement added.