AirBaltic experienced financial difficulties as of 2008, which resulted in significant losses and negative equity in 2010 and 2011, and received several public support measures. The Commission opened an in-depth investigation in
The Commission examined a
By contrast, the Commission concluded that three other measures were not carried out on market terms. These measures are:
- a second loan granted by
- a capital increase agreed in
- a transfer to airBaltic of a
Since these measures do not correspond to what a private investor in a market economy would have accepted, they entail an advantage to airBaltic and therefore state aid. The Commission then assessed whether this aid is compatible with the Commission's 2004 guidelines on state aid for the rescue and restructuring of companies in difficulty (see MEMO/04/172). The Commission found that:
- the restructuring plan submitted by
- airBaltic's withdrawal from certain routes and surrender of slots will limit the distortions of competition brought about by the aid; and
- airBaltic contributes to the costs of restructuring by securing several private financial injections and loans and a lease agreement for new aircraft.
The granting of the aid therefore complies with the conditions set out in the guidelines: the aid is accompanied by a restructuring plan that should enable the company to become viable again, appropriate measures are foreseen to compensate for the distortions of competition created by the aid, and the company contributes to the costs of restructuring at the required level.
The Commission assessed the measures under its 2004 Rescue and Restructuring Guidelines (see MEMO/04/172). Rescue and restructuring aid is highly distortive of competition as it artificially keeps a company in the market that would otherwise have left it. The guidelines therefore require that beneficiaries work out a sound restructuring plan that enables them to become viable in the long-term on the basis of realistic assumptions. This is to avoid that a company keeps asking for public support. The plan must provide for measures to reduce the distortions of competition induced by the state support, such as the reduction of capacity or market share. Furthermore, the beneficiary needs to make a significant own contribution to the costs of restructuring. Finally, rescue and/or restructuring aid may be granted only once over a 10-year period ('one time, last time' principle).
Public interventions in companies that carry out economic activities can be considered free of state aid within the meaning of the EU rules when they are made on terms that a private player operating under market conditions would have accepted (the so-called "market economy investor principle" - MEIP).
Today, the Commission has also finalised its in-depth investigations for
The non-confidential version of the decision will be made available under the case number SA.34191 in the
TNS 30FurigayJane-140710-4792619 30FurigayJane
Most Popular Stories
- Bently Creates Alabama Small Business Commission
- When to Say No to Investors, Yes to Mentors
- Bolivar Appointed to NSHMBA National Board
- Rosneft Growth Slowed by Western Sanctions
- SBA Kicks off Hispanic Heritage Month
- Duke Energy, Strata Partner on Big Solar Project
- Lindsay Lohan Claims She Handled Whitney Houston's Body Bag
- Ukraine Offers Temporary Autonomy to Rebel-held Areas
- Cat Stevens Touring U.S., First Since 1970s
- Thousands Risk Losing Health Care Aid