The European Commission approved, on 3 July, a €250 million Latvian measure to recapitalise airBaltic in the context of the Covid-19 pandemic. The scheme has been authorised under the State Aid Temporary Framework.
For Margrethe Vestager, Executive Vice President in charge of competition policy, the measure “ensures that the State is sufficiently remunerated for the risk taxpayers assume, and that the support comes with strings attached, including a dividend ban as well as further measures to limit distortions of competition”.
airBaltic is the largest airline in Latvia. Its main shareholder is the Latvian State, which currently holds a participation of around 80%. After the recapitalisation, which will take place in July 2020, the State's participation will increase to above 96%.
The Commission found that the measure notified by Latvia is in line with the conditions set out in the Temporary Framework. In particular, airBaltic is subject to bans on dividends and share buybacks. Furthermore, until at least 75% of the recapitalisation is redeemed, a strict limitation of the remuneration of their management, including a ban on bonus payments, is applied. And in order to ensure that airBaltic does not use State Aid to the detriment of fair competition in the Single Market, until at least 75% of the recapitalisation is redeemed, airBaltic is prevented from acquiring a stake of more than 10% in competitors or other operators in the same line of business.
The Commission also validated, on Monday 6 July, under the State Aid Temporary Framework, the Latvian plan to set up a fund with a target size of at least €100 million to provide liquidity and capital support to large enterprises in Latvia affected by the Covid-19 outbreak. The support will take the form of subsidised debt and recapitalisation instruments. The State will invest €50 million in the fund and the commercially managed Latvian pension investment fund will contribute the same amount.
The Commission also approved: - a Swedish scheme of approximately €9.5 million to compensate passenger ferry companies for damage suffered due to the coronavirus outbreak (under this scheme, ferry companies will be entitled to compensation for damage endured between 24 March and 31 July 2020); - two Austrian individual aid measures to support two coronavirus-relevant research and development (R&D) projects by micro biotech companies Apeptico (€840,000) and Panoptes (€1.2 million); - a €106,000 Cypriot scheme to support newspaper companies; - a bond subscription facility of €18.7 million by the Malta Development Bank (MDB) to support a bond issue by real estate developer Mediterranean Investment Holdings p.l.c. (MIH). (Original version in French by Lionel Changeur)