June 2 (SeeNews) - Romania’s transport ministry said that the country’s flag carrier Tarom expects to cut its gross loss by 80% to 62.4 million lei ($13.5 million/12.6 million euro) in 2023.
Under the baseline scenario, Tarom expects to swing to a profit in 2024 and report a positive cash flow this year, according to a draft budget published by Romania’s transport ministry on its website on Tuesday.
The company’s pessimistic forecast sees 2027 as the year when it will become profitable, while its cash flow is seen to turn positive after 2029.
Total revenues are expected to reach 2.008 billion lei in 2023, up by 33.9% on the year, of which operating revenues are seen to bring in 1.676 billion lei, up by an annual 39.4%.
Expenses are projected to rise by an annual 14.8% to 2.071 billion lei in 2023, with operating expenses amounting to 1.714 million lei, up by 20.2% on the year.
Investments for 2023 are budgeted at 115.5 million lei, surging over forty-three times compared to those implemented in 2022. Of the total investments, Tarom plans to disburse 32.9 million lei from its own funds, while 82.6 million constitute investment loans.
In May 2021, Romania submitted to the European Commission a 190 million euro ($204.5 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 cutting 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. The total value of the restructuring plan is estimated at 1.84 billion lei, with the state aid being supplemented by the airline’s own funds, a substantiation note for a 2020 government ordinance shows.
In June 2021, the Commission opened an in-depth investigation to assess whether the government measures in support of Tarom would be compatible with EU rules on state aid.
In its draft budget for 2023, Tarom added that a successful restructuring hinges on the approval of the state aid requested in its restructuring plan.
(1 euro=4.9633 lei)