Romania must recover 33.8 million Euro in incompatible state aid from Blue Air

The European Commission has concluded that Blue Air’s restructuring plan was not capable of restoring the airline’s long-term viability and it is therefore incompatible with EU State aid rules. Romania must now recover from Blue Air illegal State aid amounting to approximately 33.84 million Euro (163.8 million RON), the Commission announced.

In April 2023, the European Commission opened an investigation to assess whether a  restructuring plan for Blue Air and the aid measures implemented to support this plan were in line with EU State aid rules, in particular with the guidelines on rescue and restructuring aid to non-financial undertakings in difficulty.

Blue Air has been experiencing financial difficulties since 2019. In August 2020, the Commission approved two measures in favour of the airline: an around 28 million Euro (approximately 137 million RON) public guarantee to cover the damage directly caused by the coronavirus outbreak; and an around 33.84 million Euro (163.8 million RON) public guarantee on a rescue loan intended to partly cover Blue Air’s liquidity needs for the following six months.

Romania agreed that if the public guarantee on the rescue loan was not terminated after six months from the first aid payment which took place in October 2020 it would submit either a liquidation plan or a comprehensive restructuring plan for Blue Air to the Commission.

In April 2021, Romania submitted a restructuring plan which was subsequently updated several times. In November 2022, Romania reimbursed the loan and took a 75 percent shareholding in Blue Air after the airline suspended operations in September 2022.

Following its investigation opened in April 2023, the Commission has concluded that the restructuring plan for Blue Air was not feasible, coherent and sufficiently far-reaching to restore the airline’s long-term viability within a reasonable timeframe and without unduly distorting competition in the single market. This was corroborated by Blue Air’s inability to maintain operations and its request in March 2023 to enter into insolvency proceedings. The restructuring plan has not been updated following the cessation of operations or the opening of the in-depth investigation.

Measures to support an inadequate and unrealistic restructuring plan that is not backed by sufficient market funding from investors beyond the rescue period are illegal under EU State aid rules. Romania must now recover from Blue Air the unlawful State aid amounting to 33.84 million Euro (163.8 million RON) plus interest.