Portugal’s rescue of TAP – Transportes Aéreos de Portugal

Portugal’s rescue of TAP – Transportes Aéreos de Portugal

On 31 December 2020, Portuguese Member of the European Parliament (MEP) Nuno Melo of the Group of the European People’s Party (Christian Democrats) posed a written parliamentary question to the European Commission:

“On 10 June, the EU ruled that the airline TAP was not eligible to receive support under the Commission’s temporary framework for State aid (2020/C 91 I/01) that gives Member States greater flexibility in granting State aid to support the economy during the COVID-19 pandemic.

The EU assessed the support under its guidelines on State aid for rescuing and restructuring (2014/C 249/01) undertakings in difficulty.

The airline Condor, after being kept afloat following the bankruptcy of the Thomas Cook Group by a EUR 380 million loan underwritten by the German Government in late 2019, received EUR 550 million under the temporary framework in April 2020.

Portugal is the only Member State to bail out its airline under the rescue and restructuring guidelines. Like many other companies in the sector, TAP has seen a significant decline in business and suffered heavy losses as a result of the travel restrictions imposed to limit the spread of COVID-19.

Given that the airline Condor was given access to the temporary framework in April 2020, despite dicing with bankruptcy in 2019, why was TAP not given the same treatment?”

On 3 February 2021, Executive Vice-President Vestager responded on behalf of the European Commission stating: “Companies that were already in difficulties at the end of 2020 cannot, in general, benefit from aid under the Temporary Framework (see point 49. d.). This applies to Transportes Aéreos de Portugal (TAP Portugal) due to its financial situation on 31 December 2020.

At the same time, companies like TAP Portugal, that were in difficulties already on 31 December 2019, may benefit from aid under existing EU State aid rules, in particular the Rescue and Restructuring Guidelines. The conditions for an immediate rescue were met as regards TAP Portugal and the Commission approved it swiftly. The Commission would also like to point out that that the airline Condor has not received any aid authorised under the Temporary Framework. Instead, it received aid partly compensating the airline for damage suffered due to the COVID-19 outbreak under Article 107 (2)(b)  of the Treaty on the Functioning of the European Union (TFEU). Article 107(2)(b) requires the Commission to approve state aid measures granted by Member States to compensate specific companies or specific sectors (in the form of schemes) for damage directly caused by exceptional occurrences. In parallel, other airlines also received aid under the Rescue and Restructuring Guidelines during the COVID-19 crisis, such as the French airline Corsair or the Romanian airline Tarom.”

Source: https://www.europarl.europa.eu/doceo/document/P-9-2020-007104_EN.html

Photo Credit : https://pixabay.com/photos/wing-turbine-plane-boeing-airport-1820439/

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