IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 20 Feb 2013 | Removal date: 21 Oct 2014
Still in force

Capital injection and equity stakes (including bailouts)

On 20 February 2013, theEuropean Commission decided to start an investigation into the rescueaid provided by the. Estonian authorities to its national airline. Estonian Air. The company has been continuously making losses since 2006 and would have most likely gone bankrupt without thegenerous support from the state in recent years.
 
The beneficiary is a regionalairline operating from the Tallinn Airport mostly to Scandinavian andRussian airports. At the time of the opening of the Commission'sinvestigation, Estonian Air was owned by the. Estonian government (97.34%) and the Scandinavian Airlines System Aktiebolag(2.66%).
 
According to the Commission,the airline has benefited from three capital injections of EUR 7.3million (in 2009), EUR 19.9 million (in 2010) and EUR 30 million (in2011-12). Also, the EC decided to investigate a potential state aid during the sale in 2009 of Estonian Air's groundhandlingbusiness to the state-owned Tallinn Airport.
 
On 4 February 2014, theEuropean Commission decided on another state aid case involving EstonianAir. The. Estonian authorities informed the Commission on 20 June 2013of their intention to provide the airline company with a restructuring aid worth EUR 40.7 million in the form of equity(out of a total EUR 78.7 million). However, the "Commission decided toconsider that it does not constitute State aid in favour of Estonianair" (letter from the EC to Estonia, Brussels 4.2.2014).
 
In its justification, theCommission pointed out that "the decision of the. Estonian authorities toinject EUR 40.7 million into Estonian Air in the form of equity has tobe considered State aid. The capital injection comes directly from the State budget and thus constitutes Stateresources. Moreover, since it exclusively benefits one undertaking (i.e. Estonian Air) and is provided at conditions that a prudent marketeconomy investor would normally not accept, the planned capital injection entails a selective advantage to Estonian Air. Moreover, the measure affects trade between Member States and has animpact on competition since. Estonian Air competes with other EuropeanUnion airlines" (para. 41).
 
Update
On 6 November 2015, the EC announced the state aid for the. Estonian Air encompassing together 85 million EUR was incompatible with the single market and ordered the. Estonian government to recover the state aid provided. Hence, this measure is no longer classified as implemented.
 
A state measure in the GTAdatabase is assessed solely in terms of the extent to which itsimplementation affects the extent of discrimination against foreigncommercial interests. On this metric, the state aid proposed here is discriminatory.
 

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