State aid: Commission approves Danish public guarantee of up to €137 million to compensate airline SAS for damage caused by coronavirus outbreak

The European Commission has found a Danish State guarantee of up to approximately €137 million on a revolving credit facility in favor of Scandinavian airline SAS to be in line with EU State aid rules. The measure aims at partly compensating the airline for the damage suffered due to the coronavirus outbreak.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: ”The aviation sector has been hit particularly hard by the coronavirus outbreak. The Danish public guarantee of up to €137 million will enable Denmark to compensate SAS for part of the damage suffered due to the coronavirus outbreak. We are working closely with Member States to find workable solutions to support companies in these difficult times, in line with EU rules.”

SAS is a major network airline operating in Denmark, Sweden and Norway. It has its main hub at Copenhagen airport and, under normal circumstances, provides two-thirds of intra-Scandinavian air connectivity. Since the start of the coronavirus outbreak, SAS has suffered a significant reduction of its services, resulting in high operating losses.

Denmark notified to the Commission an aid measure to partly compensate SAS for the damage suffered due to the cancellation or re-scheduling of its flights as a result of the imposition of travel restrictions introduced by Denmark to limit the spread of the coronavirus.

The support will take the form of a State guarantee on a revolving credit facility in favor of SAS. Denmark will guarantee up to approximately€137 million of such revolving credit facility.

The exact damage suffered by SAS as a result of the outbreak will be quantified after the coronavirus crisis, based on the airline's operating accounts for the year 2020. The method used to quantify the damage will be subject to the Commission's prior approval. Furthermore, should the Danish public support exceed the damage actually suffered by SAS due to the coronavirus outbreak a claw-back mechanism will be activated. In other words, all the public support received by SAS in excess of the actual damage suffered will be have to be returned to Denmark. The risk of the State aid exceeding the damage is therefore excluded.

The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables 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.

The Commission considers that the coronavirus outbreak qualifies as an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by the Member States to compensate for the damage linked to the coronavirus outbreak are justified.

The Commission found that the Danish measure will compensate the damage suffered by SAS that is directly linked to the coronavirus outbreak. It also found that the measure is proportionate, as the foreseen compensation does not exceed what is necessary to make good the damage.

The Commission therefore concluded that the scheme is in line with EU State aid rules.