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European Commission opens investigation to asset EUR130m restructure aid for Air Malta

25-Jan-2012 6:27 PM

The European Commission has opened (25-Jan-2012) an in-depth investigation to assess whether a EUR130 million restructuring aid for the Maltese state-owned airline Air Malta is in line with EU state aid rules. The EC will examine in particular whether the planned measures are appropriate to restore the company's long-term viability and whether they ensure sufficient compensation for the distortions of competition triggered by the state support. Malta notified the EC of the EUR130 millionc apital increase in the carrier in May-2011 to "help restructure the company, which has experienced financial difficulties for several years". The underlying restructuring plan covers a five year restructuring period from 2011 to 2016. Malta’s finance minister, Tonio Fenech, welcomed the investigation, stating “the formal investigation stage is a normal part of the Commission’s approval process for restructuring plans when state aid is employed in the restructuring of airlines” (GozoNews.com, 25-Jan-2012). 

European Commission: "The Commission has doubts whether the notified restructuring plan complies with the requirements of the 2004 EU Rescue and Restructuring Guidelines. In particular, the Commission is concerned that the forecasts on long-term viability may not be realistic enough and that the proposed capacity reduction may not be appropriate to compensate for the distortions of competition created by the state support. The Commission also has doubts whether Air Malta's own contribution to the restructuring cost is sufficient. Finally, the Commission needs more information to determine whether Air Malta is eligible for restructuring aid in view of a capital injection carried out by Malta in 2004," Company Statement, 25-Jan-2012.