State aid: Commission approves restructuring aid for Czech Airlines
19-Sep-2012 After an in-depth investigation, the European Commission has concluded that restructuring aid amounting to CZK 2.5 billion (€100 million) granted to the Czech state-owned air carrier Czech Airlines is in line with EU state aid rules. The Commission found that the restructuring plan adequately addresses the financial problems of Czech Airlines. A significant capacity reduction, efficient cost and revenues management and the sale of assets should ensure the company's long-term viability without continued state support, whilst avoiding undue distortions of competition.
Joaquín Almunia, Vice-president of the European Commission in charge of competition policy, stated: "I am satisfied that the revised restructuring plan now complies with our strict conditions. The aid will help Czech Airlines to become viable again while minimising its negative impact on competition in the aviation sector."
The Czech authorities had notified their intention to restructure Czech Airlines with the help of state aid in May 2010. In June 2010, a debt-to-equity swap of a CZK 2.5 billion (€100 million) loan from the state-owned company Osinek was carried out in favour of Czech Airlines. The Commission opened an in-depth investigation in February 2011 because it had doubts whether the restructuring plan notified by the Czech authorities was suitable to restore the company's viability and to offset the distortions of competition brought about by the aid.
The Commission's investigation found that the revised restructuring plan, covering a period of five years, is based on realistic assumptions and should enable Czech Airlines to become viable again within a reasonable timeframe. The Commission concluded that the proposed capacity reduction, the sale of planes and the surrender of landing slots at European airports will avoid any undue distortion of competition. Moreover, Czech Airlines will adequately contribute to the costs of restructuring by selling subsidiaries, aircraft and other assets as well as securing a private bank loan for an aircraft lease.
The Commission therefore concluded that the measure is in line with the requirements of the 2004 EU Rescue and Restructuring Guidelines (see IP/04/856 and MEMO/04/172).