July 5 (SeeNews) - The European Commission said on Monday it has opened an in-depth investigation to assess whether Romanian support measures in favour of state-owned flag carrier Tarom would be compatible with EU rules on state aid.
At this stage, the Commission has doubts that the restructuring plan and the aid to support it satisfy the conditions of the guidelines, the EU's executive body said in a press release.
On May 28, Romania notified to the Commission a 190 million euro ($226 million) plan for the restructuring of Tarom. The plan sets out a package of measures for streamlining Tarom's operations, renewing its ageing fleet and reducing costs. This support would take the form of a capital injection, a direct subsidy and a debt write-off of the rescue aid amount and its corresponding interest.
According to the Commission, the in-depth investigation will in particular examine whether the proposed restructuring plan can restore the long-term viability of Tarom in a reasonable time frame without continued state aid.
Also, it will look into whether Tarom or market operators would sufficiently contribute to the restructuring costs, thus ensuring that the restructuring plan does not overly rely on public funding and that the aid is proportionate and whether appropriate measures to limit the distortions of competition created by the aid would accompany the restructuring plan.
Tarom has been experiencing financial difficulties for years and has received a temporary rescue loan from Romania of approximately 36.7 million euro, after approval by the Commission under EU State aid rules in February 2020.
In October 2020, the Commission approved, under EU State aid rules, a 19.3 million euro Romanian loan guarantee to compensate Tarom for damage suffered due to the coronavirus outbreak.
($= 0.842 euro)