IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 06 Nov 2013 | Removal date: open ended
Still in force

Bailout (capital injection or equity participation)

On 20 June 2013, Poland notified the EC about its intention to support LOT Polish Airlines S.A. Poland rescued the airline by providing a grant of EUR 200 million. (para. 1, letter from the EC to Poland, Brussels 6.11.2013).
 
On 20 December 2012, the Polish authorities had already granted a first rescue loan of EUR 98 million (para. 1).
 
LOT is a Polish airline founded in 1929. The airline is state-owned (93 per cent) while the remaining 7 per cent are owned by the employees. The main areas of activity are:'Domestic and international air transport of passengers, luggage, mail and cargo' (para. 10) In the recent years it faced a strong competition from low-cost carriers, leading to a decrease in the share of passengers from 55 per cent in the year 2000 to 28 per cent in the year 2012 (para. 8).
Consequently, LOT experience financial difficulties and an ongoing operational loss: 2010:EUR - 1.4 million 2011: EUR - 31 million, 2012 : EUR - 100 million.
 
The EC finds that: 'The aid is to be granted to one specific undertaking only, i.e. LOT, on terms that the Company would not have been able to obtain on the market, given its financial condition' (para. 81)
 
The EC concludes that: 'the aid is apt to improve the competitive position of LOT on the air transport business. Undertakings from different Member States are competing in the air transport business in the EU. Therefore, the aid distorts' (para. 82).
Furthermore, the EC finds that deferral agreements signed by LOT with the (state-owned) airports are on 'rather generous conditions' (para. 102)
With respect to the competition, the EC states that 'it has a relatively stronger (though weakening) position on the international routes to/from Poland with a share of the business estimated by Poland at ca.28 per cent.' (para. 119)
Therefore the list of affected countries is based on the list of carriers offering international flights from and to Poland (passengers as well as cargo).
 
'As a compensatory measure LOT proposes to close 19 connections and toreduce frequency on 5 connections', therefore the distortionary effectwill be reduced. (para. 75)
 
Update July 30, 2014:
On 29 July 2014, the Commission approved the state aid scheme. Further, it stated that the restructuring plan will allow LOT to become viable again in the near future.
 
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.

AFFECTED COUNTRIES

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