Airlines Business & Finance

EC approves Romania’s €36M bailout of Tarom

The European Commission has approved Romania’s plans to grant a loan of 36.7 million euros to the Tarom operator. The measure will ensure the orderly continuation of air transport services, in particular on many routes on which Tarom is the sole supplier. And will avoid harming passengers, without having an impact on competition in the single market.

The airline faces a severe shortage of liquidity, due to the sharp increase in operating costs generated by its former fleet in recent years. In the absence of aid, Tarom will no longer be able to meet its payment obligations while keeping operations running.

EC Guidelines on rescue and restructuring aid allow the support of companies in difficulty, provided that public aid measures are limited in time and scope and support a common interest. Rescue assistance can be granted for a maximum of six months to give the company time to find solutions in an emergency situation.

In the present case, the Commission has taken into account the following elements: the loan will cover only Tarom’s demonstrated liquidity needs over the next six months and Romania will strictly monitor how the funds are used; and Romania promised to ensure that, after six months, the loan will be fully repaid, or Tarom will submit a settlement plan or carry out a comprehensive restructuring to make it viable in the long term. Such possible restructuring would be subject to the evaluation and approval of the Commission.