European authorities to probe Romania’s state aid for bankrupt Blue Air

The European Commission (EC) has initiated a thorough investigation into Romania’s state aid to Blue Air, which has since gone bankrupt, citing violations of European Union (EU) state aid regulations.

The EC will scrutinize the airline’s restructuring plan to determine if it can achieve “long-term viability without additional or continued State aid.” Additionally, the EC will assess if Blue Air has contributed enough funds to the restructuring process, and if the proposed aid measures distort competition in the market for air transport services.

In 2020, the Romanian state granted Blue Air approximately RON137m ($32m) and RON164m ($38m) in public guarantees to cover pandemic-related losses and to offer liquidity support, respectively. Although Romania initially promised to terminate the loan guarantee after six months or submit a liquidation plan or comprehensive restructuring plan, it later extended the duration of the guarantee of the loan to six years and took a 75% stake in the airline.

The airline suspended operations in September 2022. Italy, which also provided illegal state aid to Alitalia, was recently ordered by the EC to recover €400m ($437m) plus interest.