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Romania’s €190 mln restructuring aid for Tarom airline under EU scrutiny

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The European Commission announced on Monday that it has opened an investigation to assess Romania’s €190 million support measures in favour of the airline TAROM and if it is in line with EU rules on state aid to companies in difficulty.

The state-owned flag carrier, Tarom has been experiencing financial difficulties for years and received a temporary rescue loan from Romania of approximately €36.7 million, after approval by the Commission under EU State aid rules in February 2020, according to a press release.

Romania notified the Commission on 28 May 2021, a plan for the restructuring of TAROM which sets out a package of measures for streamlining TAROM’s operations, renewing its ageing fleet and reducing costs.  

The Commission said that Romania plans to support the restructuring with around €190 million of public funding by means of a capital injection, a direct subsidy and a debt write-off of the rescue aid amount (approximately €36.7 million) and its corresponding interest.

The Commission stated that rescue aid may be granted for a period of up to six months, and beyond this period, either rescue aid must be reimbursed or the Member States must notify a restructuring plan to the Commission, for assessment under the State aid rules.

For restructuring aid to be approved, the plan must ensure that the viability of the company can be restored without continued State support, that the company contributes sufficiently to the costs of its restructuring.