The European Commission on Monday approved Romania’s plans to grant a temporary loan of about 36.7 million euros to state-owned flag carrier Tarom.
The money is to ensure the orderly continuation of air transport services, in particular on routes where Tarom is the only provider, to avoid disruptions for passengers, without unduly distorting competition in the single market.
In February 2020, Romania notified the Commission of its intention to grant a rescue loan. The airline faces an acute liquidity shortage, due to a hefty increase in operating costs of its ageing fleet.
Without the aid, the company will be unable to cover running costs and keep its operations running.
Rescue aid can be granted for maximum six months to give a company time to work out solutions in an emergency situation.
The EC also cleared public support granted by Romania to Timisoara Airport, the country’s third largest, saying the aid complied with EU rules ensuring a level playing field.
Separately, the EU competition enforcer ordered Romania to recover 570 million euros of state aid from rail freight operator CFR Marfa because the support gave it an unfair advantage.
The government said in that without the aid, the airlines wouldn’t be able to function beyond the end of March.
Tarom has been struggling with financial and operational problems for many years. It has made losses for 11 consecutive years.
According to finance ministry. Tarom had losses of about 183 million lei in 2018.
At the same time, in 2018, its business grew by 1.2 billion lei, 17 % more than the previous year, Profit.ro reported. ‘
The transport ministry owns a 97% stake in the company.