The European Commission has found a €462 million Portuguese support measure in favour of Transportes Aéreos Portugueses, S.A. (“TAP”) to be in line with EU State aid rules. The measure aims at compensating the airline for the damage suffered due to the coronavirus outbreak between 19 March and 30 June 2020.
Executive Vice-President Margrethe Vestager in charge of competition policy, said: “This measure will enable Portugal to compensate TAP for the damage it suffered as a direct result of the travel restrictions that Portugal and other destination countries had to implement to limit the spread of the coronavirus. Separately, our assessment of the restructuring plan for the company submitted by Portugal is ongoing. We continue being in close and constructive contacts with the Portuguese authorities in this context.”
TAP is a subsidiary of Transportes Aéreos Portugueses, SGPS, S.A. (“TAP SGPS”), a holding company controlled by the Portuguese State, which, in addition to TAP, also owns other companies active in air passenger and cargo transportation, catering and handling services, maintenance, repair and operations in Portugal and Brazil. TAP, in addition to being the largest subsidiary of TAP SGPS, is the largest airline based in Portugal. In 2019, it accounted for more than 50% of the arrivals and departures at Lisbon International Airport. TAP is a major economic operator in the country, as well as a significant employer.
Portugal notified to the Commission an aid measure to compensate TAP for the damage it suffered between 19 March and 30 June 2020 as a direct result of the containment measures and travel restrictions that Portugal and other destination countries had to introduce to limit the spread of the coronavirus. The support will take the form of a €462 million loan that may be converted into capital and disbursed to TAP in one or several instalments.
In order to ensure that there will be no overcompensation, the measure provides that Portugal, by September 2021, Portugal will review and report back to the Commission on the amount of actual damage suffered, following independent verification based on the company's audited accounts. Any public support received by TAP in excess of the actual damage will have to be returned to Portugal.
The Commission assessed the measure under article Article 107(2)(b)of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid granted to compensate specific companies or specific sectors for the damages 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 damages directly linked to the outbreak are justified.
The Commission found in particular that the Portuguese measure will compensate damage that is directly linked to the coronavirus outbreak. It also found that the measure is proportionate, as the compensation does not exceed what is necessary to make good the damage.
On this basis, the Commission concluded that the Portuguese measure is in line with EU State aid rules.