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European Commission - Press release
State aid: Commission opens in-depth investigation into restructuring aid for Air Malta
Brussels, 25 January 2012 - The European Commission has opened an in-depth investigation to assess whether a €130 million restructuring aid for the Maltese state-owned airline Air Malta is in line with EU state aid rules. The Commission will examine in particular whether the planned measures are appropriate to restore the company's long-term viability and whether they ensure sufficient compensation for the distortions of competition triggered by the state support. The opening of an in-depth investigation allows interested third parties to comment on the measures under investigation. It does not prejudge the final outcome.
In November 2010, the Commission authorised a loan facility of €52 million for Air Malta as rescue aid (see IP/10/1509). The Maltese authorities committed themselves to notify a restructuring plan within 6 months after the rescue aid decision.
In May 2011, Malta notified the Commission a €130 million capital increase. This is to help restructure the company, which has experienced financial difficulties for several years. The underlying restructuring plan covers a five year restructuring period from 2011 to 2016.
The Commission has doubts whether the notified restructuring plan complies with the requirements of the 2004 EU Rescue and Restructuring Guidelines (see IP/04/856 and MEMO/04/172). In particular, the Commission is concerned that the forecasts on long-term viability may not be realistic enough and that the proposed capacity reduction may not be appropriate to compensate for the distortions of competition created by the state support. The Commission also has doubts whether Air Malta's own contribution to the restructuring cost is sufficient.
Finally, the Commission needs more information to determine whether Air Malta is eligible for restructuring aid in view of a capital injection carried out by Malta in 2004.
Rescue and restructuring aid is highly distortive of competition as it artificially keeps a company in the market that would otherwise have exited it. The Rescue and Restructuring Guidelines require that the restructuring plan enables the company to become viable in the long-term on the basis of realistic assumptions. This is to avoid that a company keeps asking for public support. The plan must foresee measures to reduce the distortions of competition induced by the state support, such as the reduction of capacity or market share. Furthermore, the beneficiary needs to make a significant own contribution to the costs of restructuring. Finally, restructuring aid may be granted only once over a period of ten years ('one time, last time' principle).
The non-confidential version of the decision will be made available under the case number SA.33015 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