European Commission approves restructuring aid for airBaltic

European Commission concluded (09-Jul-2014) a number of measures granted by Latvia's Government in 2011 and 2012, in the context of airBaltic's restructuring, were in line with European Union (EU) state aid rules. The Commission found measures undertaken by the government and fellow airBaltic shareholder BAS, including the granting of a LVL16 million (EUR22.65 million) loan and the purchase of 0%-coupon bonds issued by the carrier "were carried out on market terms, they procured no undue economic advantage to airBaltic and therefore do not involve any state aid within the meaning of EU rules." The Commission however found the following measures were not carried out on market terms:

• A second loan granted by Latvia, the first tranche of LVL41.6 million (EUR58.89 million) paid in Dec-2011 and the second tranche of LVL25.4 million (EUR35.96 million) paid in Dec-2012;
• A capital increase agreed in Dec-2011 by Latvia and BAS through loan conversions and a cash contribution from BAS, but in which BAS in the end did not participate;
• A transfer to airBaltic of a EUR5 million claim held by Latvia in exchange of just LVL1.

The Commission found the above measures conformed with its 2004 guidelines on state aid, as "the aid is accompanied by a restructuring plan that should enable the company to become viable again, appropriate measures are foreseen to compensate for the distortions of competition created by the aid, and the company contributes to the costs of restructuring at the required level." [more - original PR]