The restructuring plan of now-bankrupt Blue Air (Romania) (BLA, Bucharest Henri Coanda) failed to ensure the long-term viability of the carrier and so violated EU state aid rules, the European Commission has announced, adding that Romania must now recover the RON163.8 million lei (USD35.6 million) provided to it, plus interest.
The European Union executive body’s decision comes after it decided in April 2023 to investigate the viability of Blue Air's restructuring plan and the aid measures implemented to support it.
Blue Air was grappling with financial troubles from 2019, before the Covid-19 outbreak. It received approval from the Brussels in August 2020 for two aid measures amounting to around RON300.8 million (USD65.4 million) to counteract the adverse effects of the pandemic. This included a public guarantee of approximately RON137 million (USD29.8 million), and a RON163.8 million public guarantee on a rescue loan to address liquidity needs.
In agreement with the Commission, Bucharest committed to submitting either a liquidation or a comprehensive restructuring plan for Blue Air if the public guarantee on the rescue loan exceeded six months from its disbursement in October 2020. It submitted a plan in April 2021, which was subsequently updated multiple times.
However, the in-depth investigation revealed 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," the Commission's statement, dated February 16, said.
This conclusion was reinforced, it said, by Blue Air's inability to sustain operations, leading to its request for insolvency proceedings in March 2023. The restructuring plan has not been updated following the cessation of operations or the opening of the investigation, it added.
Under EU state aid rules, member states can support distressed companies under strict conditions, but aid beyond a six-month rescue period must either be reimbursed or involve the submission of a restructuring plan for assessment, the statement reminded. For approval, the plan must show viability without continuous state support as well as address any competition distortions.
Romania's Ministry of Finance must now calculate the interest and send it to the country’s fiscal administration agency (Agenția Națională de Administrare Fiscală - ANAF), which will complete the recovery procedures, which could include forced execution, local media reported.
Blue Air’s main shareholder, Airline Invest SA, was declared bankrupt last September, while the airline itself garnered limited investor attention.
