The European Commission has approved, under EU State aid rules, a loan guarantee of around €19.3 million to compensate the Romanian state-owned airline TAROM for damaged suffered due to the Covid-19 outbreak.
The measure aims to compensate TAROM for the losses related to the coronavirus outbreak and the travel restrictions introduced by Romania and other destination countries to limit the spread of the virus in the period between 16 March 2020 and 30 June 2020. These restrictions have caused TAROM major losses in turnover, as the Romanian airline was forced to cancel most of its scheduled flights.
The public support will take the form of guarantee to market loan(s).
The European Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU). The article enables the Commission to approve State aid measures granted by Member States to compensate specific companies or sectors for losses caused by exceptional events, such as the Covid-19 outbreak.
According to the Commission, the Romanian measure will compensate a loss that is directly related to the coronavirus outbreak.
An independent external audit firm will have to verify that the aid does not exceed the actual losses incurred by the airline between 16 March and 30 June 2020. In case of overcompensation, TAROM will have to return to Romania any public support that exceeds the actual damage suffered by the company. The risk of overcompensation is therefore excluded.
The European Commission declares that the measure is proportionate as the compensation does not exceed the value of the actual damage. Therefore, the Commission agrees that the Romanian measure is in line with EU State aid rules.
