European Commission approves  €71.4 million Portuguese measure to reimburse TAP Air Portugal for losses incurred as a result of the pandemic

The European Commission approved a €71.4 million Portuguese aid measure today, in accordance with EU State aid standards, to help TAP Air Portugal cope with the coronavirus outbreak. 

TAP Air Portugal is the Portuguese flag carrier and, as the country’s largest airline, a key provider of people and cargo mobility services, both on the mainland and in the autonomous regions of Madeira and the Azores, as well as in Portuguese-speaking nations and diaspora groups. The corporation is a large employer in Portugal and plays an important role in the growth of the country’s tourism and economy. It accounted for more than half of all arrivals and departures at Lisbon International Airport in 2019. 

Portugal has notified the Commission of a new aid measure of €71.4 million to reimburse TAP Air Portugal for losses incurred between 1 January and 30 June 2021 as a direct result of the virus’s spread-limiting travel restrictions. TAP Air Portugal suffered considerable operating losses as a result of these travel restrictions, as well as a sharp drop in traffic and profitability during this time. This comes after the Commission approved prior support measures in the airline’s favour on April 23, 2021, and December 21, 2021. 

The aid will be in the form of a capital injection or a loan that can be converted into capital under the compensation mechanism. The Portuguese government will choose between these two types of assistance. 

The measure was evaluated by the Commission under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), which allows the Commission to authorize State aid provided to compensate specific industries or sectors for damages directly caused by exceptional events. The coronavirus outbreak, according to the Commission, qualifies as an exceptional occurrence since it is a rare, unforeseen event with a considerable economic impact. As a result, Member States’ extraordinary actions to compensate for damages directly related to the pandemic are justified. 

The Commission concluded that the Portuguese action will compensate for losses caused directly by the coronavirus outbreak. It also determined that the measure is proportionate because the compensation does not exceed what is required to compensate for the damage. 

The Commission found that the Portuguese legislation complies with EU State aid criteria on this basis. 

Photo Credit :