ANNOUNCEMENT 04 Sep 2017

On 4 September 2017, the European Commission approved a rescue loan (bail-out) from Germany to Air Berlin PLC & Co. Luftverkehrs KG.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

SA.48937. Rescue aid in favour of Air Berlin PLC & Co. Luftverkehrs KG :
http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_48937

Original publication:
http://eur-lex.europa.eu/JOHtml.do?uri=OJ:C:2017:400:SOM:EN:HTML

European Commission decision. SA.48937
http://ec.europa.eu/competition/state_aid/cases/270795/270795_1938991_221_2.pdf

European Commission. Press release of 4 September 2017.
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/17/3083

Inception date: 04 Sep 2017 | Removal date: open ended

Capital injection and equity stakes (including bailouts)

On 4 September 2017, the European Commission approved a EUR 150 (USD 187.5) million rescue loan (bail-out) from Germany. The aid will support the air transport company Air Berlin PLC & Co. Luftverkehrs KG. The aid measure is in force from 04.09.2017.

The aid measure, consisting of a loan of up to EUR 150 million, that will be provided by the German public credit institution "Kreditanstalt für Wiederaufbau" (Credit Institution for Reconstruction, "KfW"). The objective of the rescue loan is “to enable Air Berlin to continue operations for maximum three months, with the aim of (i) maintaining orderly air transport during the holiday season and (ii) achieving the sale of Air Berlin plc's assets in an orderly manner with the least negative consequences for staff.” The German authorities noted that “the loan will only be used to cover the operating costs of Air Berlin for the months September and October 2017. The loan can be drawn down for a duration of three months. Reimbursement is due at the end of the three months, with the possibility for Air Berlin to ask for a one-time extension of maximum six weeks.”

In this context, the European Commission noted that “Rescue and restructuring aid are among the most distortive types of state aid and can only be granted to companies once these have exhausted all other market options” (Press Release). The Commission also underlined that “Germany notified the measure as rescue aid and therefore Germany considers that it involves State aid. (...) The notified measure, by allowing Air Berlin to finance its liquidity gap at an interest rate of [750-950] basis points above IBOR, confers an advantage that Air Berlin would not have obtained under normal market conditions, since its largest single shareholder has unexpectedly discontinued financing the company and Air Berlin has not found any other source of financing. The aviation market is open to competition in the EU. Air Berlin operates routes within Germany and Europe and overseas (Americas, Caribbean countries). It is in direct competition with other Union providers. (...) The measure is therefore liable to distort or threaten to distort competition and to affect trade between Member States.” (the Commission decision text, par.67,70,72)

Regardless, the Commission has decided not to raise objections to the measure “to be granted to Air Berlin PLC & Co. Luftverkehrs KG, as amended by the three commitments described above at recitals ((45), (51) and (52)), on the grounds that it is compatible with the internal market pursuant to Article 107(3)(c) of the Treaty on the Functioning of the European Union.”

The state aid is notified under the following objective: Rescuing undertakings in difficulty.

A state act in the GTA database is assessed solely in terms of the extent to which its implementation affects foreign commercial interests. On this metric, the financial support granted here is discriminatory.

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