The European Commission has approved €133 million support to SATA Air Açores. This aid will help the airline to fulfil its public service obligations and ensure the connectivity of the Azores outermost region. The Commission has also opened an investigation to assess whether certain public support measures by Portugal in favor of SATA are in line with EU rules on State aid to companies in difficulty.
SATA is controlled by the Portuguese Autonomous Region of Azores. Together with another company of the same group (SATA Internacional – Azores Airlines), SATA offers passenger and cargo services within the Azores, and from/to national and international destinations. With respect to certain routes, it has been entrusted with a public service obligation to ensure connectivity of the islands. SATA provides also other services, such as the management of five airports the Azores.
Since at least 2014, SATA has been experiencing operating losses, and this has been worsened by the covid-19 crisis. Now the company is facing urgent liquidity needs.
1. The Portuguese liquidity measure to support SATA
Portugal notified the Commission of its intention to grant urgent support to SATA, with the aim of providing the company with sufficient resources to address its urgent and immediate liquidity needs until the end of January 2021.
SATA cannot receive support under the Commission’s State aid Temporary Framework, which is aimed at companies that weren’t already in difficulty on 31 December 2019. Hence, the Commission has assessed the measure under the 2014 Guidelines on State aid for rescue and restructuring. These guidelines enable Member States to support with temporary liquidity service providers in order to maintain essential services, including air transport connectivity.
According to the Portuguese authorities, SATA’s liquidity needs for the next six months amount to approximately €133 million.
The Commission found that the aid is necessary to allow the company to continue providing essential services, including routes subject to public service obligations and services of general economic interest at local airports. For this reason, the measure has been approved under EU State aid rules.
2. The Commission opens an investigation
The Commission has decided to open an investigation to assess whether certain support measures in favor of SATA are in line with the 2014 Guidelines on State aid for rescue and restructuring.
As of 2017, the Autonomous Region of Azores – which owns SATA – approved three capital increases to address SATA’s needs. The Portuguese authorities claim that these capital increases do not constitute State aid under EU rules since the Regional Government of Azores acted as a private investor. The Commission will now investigate further.
