The European Commission on Tuesday (Dec.21) has approved, under EU State aid rules, a €71.4 million Portuguese aid measure to further support TAP Air Portugal in the context of the coronavirus pandemic.
TAP Air Portugal is a Portuguese flag carrier and, as the largest airline based in Portugal, a major provider of mobility services for people and cargo, both in the mainland and the Autonomous Regions of Madeira and Azores, as well as for Portuguese-speaking countries and diaspora communities. The company plays a key role in the growth of Portuguese tourism and the economy as a whole and is a significant employer in Portugal. In 2019, it accounted for more than 50% of the arrivals and departures at the Lisbon International Airport.
The damage compensation measure
Portugal notified the Commission of another aid measure amounting to a total of €71.4 million to compensate TAP Air Portugal for the damage it suffered between 1 January and 30 June 2021 as a direct result of the travel restrictions in place to limit the spread of the virus. Because of these travel restrictions, TAP Air Portugal incurred significant operating losses and experienced a steep decline in traffic and profitability over this period. This follows previous support measures in favour of the airline that the Commission approved on 23 April 2021 and on 21 December 2021.
Under the compensation measure, the aid will take the form of either (i) a capital injection; or (ii) a loan that may be converted into capital. The choice between these forms of support will be made by the Portuguese government.
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 pandemic are justified.
The Commission found in particular that the Portuguese measure will compensate the 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.
