June 18
2021
Dolores Utrilla
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11th June 2021
Competition & State Aid Covid-19 Internal Market

Alleged unlawful Portuguese aid to Azores Airlines: Commission’s invitation to submit comments

Today, the Commission invited interested parties to submit comments in the context of the investigation procedure under Article 108(2) TFEU regarding State aid case SA.62043 C/2021 (ex 2021/N).

The procedure concerns the restructuring aid awarded by Portugal to Azores Airlines Sociedade Anónima (SATA), a company fully owned by the Açores Autonomous Region that is active in the air transport sector and which provides air transport passenger and cargo services with routes under public service obligations, or on a commercial basis. SATA has been experiencing recurring operating losses so that its equity has been  negative in recent years. These financial difficulties are now aggravated by the effects of the COVID-19 outbreak.

On 18 August 2020, the Commission opened formal proceedings on notified rescue aid to SATA, pursuant to Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (the R&R Guidelines). On 14 April 2021, Portugal notified additional restructuring aid supporting a long-term restructuring plan until 2025. The plan covers all the companies and activities of SATA and estimates restructuring costs until 2025 including repayment of bank loans, operating costs and capital expenditure for parts of aircraft. According to the notification, the contribution of SATA to the restructuring costs will consist of less than 50 % over the period 2020-2025.

At this stage, the Commission has doubts whether the restructuring aid is proportionate and whether negative effects on competition are sufficiently mitigated so that the aid meets the conditions for compatibility with the internal market under Article 107(3) c) TFEU set out in the R&R Guidelines.

By its notice today, the Commission invites all interested parties to submit their comments within one month of today’s announcement.

Access the publication here.

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