Brussels, 15 December 2009
State aid: Commission endorses €33.8 million public R&D funding for Diehl Aircabin
The European Commission has authorised Germany under EU state aid rules to give €33.8 million of R&D support to Diehl Aircabin, for the experimental development of aircraft-cabin linings and air ducts. Each of the two projects would receive one repayable advance of €14.7 and €10.9 million respectively and one regular loan of €4.7 million and €3.5 million respectively at market-interest rates. The Commission found the repayable advances compatible with the EU Framework for state aid for research and development and innovation (see IP/06/1600 and MEMO/06/441). In particular, the aid addresses a specific market failure of the private capital market, is appropriate, and is limited to the minimum necessary. The loans are granted on market terms and do not constitute state aid.
Competition Commissioner Neelie Kroes said "I am satisfied that the state support for these technologically challenging projects will strengthen the knowledge base of EU industry in new lightweight materials to cut aircraft fuel consumption and help us to meet our climate change objectives without unduly distorting competition."
Germany notified both individual measures on 14 May 2009. Funding will be granted under an existing state-aid scheme approved by the Commission in July 2009 (see N 276/2009).
In its 'Floor-to-Floor' project, Diehl Aircabin will develop passenger-cabin linings, e.g. side-wall and ceiling panels and overhead-stowage compartments. In its 'Airducts' project, the enterprise will develop passenger-cabin and cargo-bay ventilation ducts. Each project will be funded by a repayable advance, together with a regular market-rate loan.
The Commission found that the repayable advances constitute state aid because their reimbursement depends on the sales of the products that are to be developed with the aid. Both advances will have been repaid in full when a pre-defined sales target is attained. The loans do not constitute state aid, as they are unconditionally reimbursable and as their interest rate will be set in accordance with the Commission Communication on the method for setting reference and discount rates.
The Commission assessed both measures in detail. In particular, the Commission found that Diehl Aircabin had done its utmost to obtain adequate risk-sharing financing on the market, that the aid is proportionate to the degree of success of the project and that it is limited to the minimum necessary to attain its objective. The Commission concluded that the aid would address a genuine market failure, namely the private sector's reluctance to provide sufficient risk-sharing capital for valuable R&D projects. Moreover, the aid is appropriate and proportional.
Given the particular structure of the aeronautical market, and Diehl Aircabin's position in that market, the impact on competition is sufficiently limited. The Commission approved both individual aid measures with a single decision.
The non-confidential version of that decision will be made available under the case numbers N 296/2009 and N 297/2009 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News .