Ayuda estatal — Portugal — Ayuda estatal SA.58101 (C/2020) (ex 2020/N) — Ayuda de salvamento a SATA — Invitación a presentar observaciones en aplicación del artículo 108, apartado 2, del Tratado de Funcionamiento de la Unión Europea

• Section: Serie C

4.9.2020 ES Diario Oficial de la Unión Europea C 294/41

Comisión Europea Dirección General de Competencia Registro de Ayudas Estatales 1049 Bruxelles/Brussel BELGIQUE/BELGIË Fax + 32 22961242 Stateaidgreffe@ec.europa.eu

(1) Following pre-notification contacts (2), on 13 August 2020, Portugal notified to the Commission its plans to grant rescue aid in favour of SATA. Portugal amended and completed the notification on 14 August 2020.

(2) Portugal agreed exceptionally to waive the rights deriving from Article 342 TFEU in conjunction with Article 3 of the EC Regulation 1/1958 (3) and to have the decision adopted and notified pursuant to Article 297 TFEU in English.

(3) SATA Air Açores is a Sociedade Anónima (limited liability company) (4) and holding of other companies that is based in the Azores Autonomous Region of Portugal (‘the Region’). SATA Air Açores was incorporated in 1941 and is fully owned by the Government of the Region. SATA employs 1 400 persons, of which 1 150 locally in the Region and 250 in Lisbon. SATA Air Açores controls various companies: SATA Internacional — Azores Airlines, S.A. (‘Azores Airlines’), SATA — Gestão de Aeródromos, S.A. (‘SATA Gestão de Aeródromos’ or ‘SGA’) and Azores Vacations America and Azores Vacations Canada.

(4) SATA Air Açores provides air transport passenger and cargo services with routes under public service obligations (‘PSO’) (5), or on commercial basis. SATA Air Açores serves the nine islands of the Region through inter-island air transport of the Azores Archipelago, for a total of 14 routes, under PSO entrusted exclusively to SATA Air Açores by means of a 5-year public service contract expiring on 30 September 2020. SATA Air Açores was the only airline that submitted a bid for these routes in 2015. In 2019, SATA Air Açores operated more than 15 000 flights, with six Dash Bombardier planes which carried around 766 000 passengers.

(5) Azores Airlines was incorporated in December 1990 and has an administrative hub in Ponta Delgada and one operational base in Lisbon. Azores Airlines operates without compensation i) 3 PSO routes connecting the five gateways of the Azores (São Miguel, Terceira, Santa Maria, Horta and Pico islands) to mainland Portugal, ii) a PSO route linking Ponta Delgada to Funchal (Madeira island) and iii) international flights for regular routes in the North Atlantic to Boston, Oakland, Toronto and Montreal. Azores Airlines also operates niche tourist markets and charter services. Even if the abovementioned PSO routes are open to all operators willing to comply with the PSOs imposed on the routes, Azores Airlines is the only airline operating these PSO routes. In 2019, Azores Airlines operated around 7 000 flights, through six medium course Airbus 320 planes serving around 946 000 passengers.

(6) SATA Gestão de Aeródromos, incorporated in 2005, is dedicated to the management of the aerodromes of Pico, Graciosa, Corvo and São Jorge, as well as the Flores island terminal. Portugal alleges that the management of these airports is not economically attractive for private parties, contrary to the airports of São Miguel and Terceira, which are operated by the Vinci Group.

(7) The Portuguese authorities consider that the management and operation of the airports of these islands Pico, Graciosa, Corvo and São Jorge, as well as the Flores island terminal are services of general economic interest (‘SGEI’) (6). Air traffic in each of these airports has been below 200 000 passengers per year in the last three years (7). Portugal reported to the Commission the SGEI of these five airports in 2016-2017 (8). Indeed Portugal considers that the need to ensure connectivity of an isolated area of the European Union justifies the SGEI, in view of the lack of alternative means of transport available and in light of the criteria set out in the Guidelines on State aid to airports and airlines (‘Aviation Guidelines’) (9).

(8) SATA also owns two tour operators in North America since 1985: Azores Vacations America and Azores Vacations Canada. Their business focus is on connecting North America, mainland Portugal and the Region throughout the year.

(9) SATA handles all of the air-cargo within the Azores islands, that is around 2 900 tonnes per year, and around 1 500 tonnes per year from Azores to other destinations, that is nearly 60 % of total air-cargo outside Azores, including fish (around 60 %), mail (around 10 %) and medical supplies.

(10) At present, Transportes Aéreos Portugueses S.A. Ryanair, Arkefly and Jetairfly serve commercial, non PSO routes between the Azores archipelago and the rest of the territory of the Union. As to direct routes, Ryanair connects the Azores with London, Manchester and Frankfurt. Jetairfly has a route connecting Azores with Brussels. Arkefly connects Azores with Amsterdam and Tenerife in the Canary Islands (Kingdom of Spain).

(11) SATA experienced increasing financial difficulties at least over the past seven years. Portugal informs that SATA Air Açores fulfils at present the criteria under domestic law for being placed in collective insolvency proceedings: around […] (*1) % of total debt to suppliers in 2019 is overdue; in 2019, the amount of EUR 464 million the liabilities exceeded by far assets worth EUR 234 million.

(12) Between 2014 and 2019, despite annual turnover growing at ca. 5,1 %, SATA posted continuous net income losses, worsening since 2017. Accordingly, SATA’s equity that was already negative in 2014 decreased to become deeply negative by 31 December 2019, whilst net debt increased by 63 % in the same period.

2014 2015 2016 2017 2018 2019 Turnover 185,1 180,5 205,4 216,6 211,1 232,6 Net income -34,78 -22,18 -14,19 -41,22 -63,79 -53,43 Debt to Suppliers -21,3 -34,2 -45,3 -55,8 -48,3 -47,5 Cash & equivalents 9,6 6,3 6,7 3,8 5,7 6,7 Financial Debt - 162,3 - 161,1 - 160,8 - 167,2 - 214,1 - 256,1 Net Debt - 152,7 - 154,8 - 154,1 - 163,4 - 208,4 - 249,4 Own Funds (Equity) -55,8 -78,5 -94,6 - 135,6 - 156,3 - 230,3 Source: Consolidated annual accounts and Annex 2.2 of Notification

(13) Among other measures supporting liquidity such as guarantees or credit facilities that SATA Air Azores regularly serviced and reimbursed when fallen due, the Regional Government partly addressed the shortfall of own funds and solvency and approved three capital increases in SATA Air Azores since 2017, of which EUR 72,6 million were already paid to the company (‘the capital increases’): — EUR 21 580 735 were provided in 2017;

— EUR 27 000 000 were provided in 2018;

— EUR 80 000 000 were approved in 2020, from which EUR 24 000 000 have already been paid, the remaining amount being due by 2023.

(14) In respect of the capital increases, Portugal explains that they aimed at complying with the Portuguese Companies Code regarding situations of loss of half of paid-in share capital due to accumulated losses. This situation requires shareholders to deliberate on and consider providing fresh capital to remedy the losses.

(15) The Region is an archipelago composed of nine volcanic islands, located in the North Atlantic Ocean, about 1 400 km away from mainland Portugal and populated with 245 000 inhabitants. The Region has a small and dispersed market with limited economies of scale: six islands are below 250 km2 and seven islands have less than 15 000 inhabitants each. The islands can be reached from the mainland in two to three days by sea or two hours by plane. The Region is totally dependent of air transport, especially during winter, when weather conditions often render unavailable maritime transport. The gross domestic product per capita in the Region amounts to 68 % of the Union average. Portugal stresses that the Azores is one of the ultra-peripheral outermost regions of the European Union.

(16) According to the Portuguese authorities, PSO flights guaranteeing air connections inter-island and between the Region and Portugal mainland provided by SATA Air Açores and Azores Airlines are services of general economic interest (‘SGEI’). The public tenders for the provision of SGEI typically do not attract other bidders. In the last public tender for the entrustment of those SGEIs in 2015, SATA Air Açores was the only company bidding for the inter-island connection PSOs. This is also the case for Azores Airlines, which is the only company serving the other inter-island connection PSO (Funchal — Ponta Delgada) and the 3 PSO routes connecting the Region and the mainland. Yet these four routes are open to all airlines complying with the PSO imposed by Portugal on the routes. TAP Air Portugal has not bid for the PSOs routes to connect Lisbon with Horta and Pico Island since April 2015. EasyJet ceased to fly on a PSO route in 2017, as the company could not ensure the requested frequency.

(17) According to Portugal, the international routes operated by Azores Airlines are particularly important for the Region, considering the spread around the world of the Azorean migrant communities. The Azorean diaspora is estimated at 1,5 million people, most of them in North America. SATA ensures connections with diaspora communities, which are key for the region’s economy. Around 113 000 passengers came from North America in 2019 and the number of passengers from that continent has been increasing significantly in the last few years.

(18) Finally, SATA is the largest company and one of the most important employers of the Region. According to Portugal, SATA generates around 5,2 % of the regional GDP and participates in the development of tourism in the region, carrying c.a. 40 % of the passengers arriving to Azores. The tourism sector has been increasing and now represents over 10 % of the regional GDP, with related effects on direct and indirect jobs in Azores.

(19) SATA faces the impacts of the legal and regulatory restrictions imposed on companies and individuals within the aviation sector. The public policy measures or recommendations taken on health grounds to...