The European Commission (EC) has given Portugal one month to respond to its preliminary findings that the restructuring proposal for the national airline TAP Air Portugal, with a budget of around € 3 billion, does not comply with Union rules relating to Europe (EU) … to market compatibility, informed CH-Aviation…
On July 30, the EC published its July 16 decision to initiate an in-depth investigation into compliance with Portugal’s proposed TAP restructuring plan, as well as compliance with the proposed government support. The investigation is ongoing and is scheduled for completion by the end of this year.
The restructuring plan for TAP and its subsidiary Portugália Airlines includes fleet reductions and network rationalization by 2023. At the same time, TAP will renegotiate terms with suppliers and landlords and cut staff costs. The government will then finance the restructuring through financing and borrowing.
In its preliminary findings, the Commission expressed doubts that the sale of unprofitable activities proposed by Portugal would reduce the impact of government support on free competition. He also had doubts about whether the restructuring assistance would be commensurate, as TAP would contribute only 36% of the total restructuring costs.
“By providing access to finance on terms that it would not otherwise receive in the market, government funding is likely to improve the position of the beneficiary vis-à-vis actual or potential competitors who do not have access to similar government support or who must fund their own operations on non-competitive terms. Capital increases and loan guarantees distort or threaten to harm competition “, – said the commission.
