European Commission approves €550 million German State-guaranteed loan to compensate airline Condor for damage caused by coronavirus outbreak

 

The European Commission has found a State-guaranteed €550 million public loan in favour of German charter airline Condor to be in line with EU State aid rules. The measure aims at partly compensating the airline for the damage suffered due to the coronavirus outbreak.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: ”This State-guaranteed €550 million loan will allow Germany to compensate Condor, operating in the particularly hard hit aviation sector, for part of the damage suffered due to the coronavirus outbreak. We cooperate with Member States to find workable solutions to support companies in these difficult times, in line with EU rules.”

Germany notified to the Commission an aid measure to partly compensate charter airline Condor for the damage suffered due to the cancellation or re-scheduling of its flights as a result of the imposition of travel restrictions introduced by Germany and by many destination countries to limit the spread of the coronavirus.

The support will take the form of a State-guaranteed €550 million public loan granted via the German development bank Kreditanstalt für Wiederaufbau (KfW).

The exact damage suffered by Condor as a result of the outbreak will be quantified after the coronavirus crisis, based on the airline’s operating accounts for the year 2020. The method used to quantify the damage will be subject to the Commission’s prior approval. Furthermore, should the German public support exceed the damage actually suffered by Condor due to the coronavirus outbreak a claw-back mechanism will be activated. In other words, all the public support received by Condor in excess of the actual damage suffered will have to be returned to Germany. The risk of the State aid exceeding the damage is therefore excluded.

The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures granted by Member States to compensate specific companies or specific sectors (in the form of schemes) for damage directly caused by exceptional occurrences.

The Commission considers that the coronavirus outbreak qualifies as an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by the Member States to compensate for the damage linked to the coronavirus outbreak are justified.

The Commission found that the German measure will compensate part of the damage suffered by Condor that is directly linked to the coronavirus outbreak. It also found that the measure is proportionate, as the foreseen compensation does not exceed what is necessary to make good the damage.

The Commission therefore concluded that the measure is in line with EU State aid rules.

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