Ayuda estatal — Portugal — Ayuda estatal SA.62043 C/2021 (ex; 2021/N) — Portugal — Ayuda para la reestructuración de SATA — Invitación a presentar observaciones en aplicación del artículo 108, apartado 2, del Tratado de Funcionamiento de la Unión Europea

• Section: Serie C

11.6.2021 ES Diario Oficial de la Unión Europea C 223/37

Comisión Europea Dirección General de Competencia Registro de Ayudas Estatales 1049 Bruxelles/Brussel BELGIQUE/BELGIË Fax: + 32 2 296 12 42 Stateaidgreffe@ec.europa.eu

(1) By letter dated 18 August 2020, the Commission informed Portugal that it had decided to initiate the procedure laid down in Article 108(2) of the TFEU in respect of public financing of past capital increases of SATA and of planned rescue aid (the ‘Opening Decision’). The Opening Decision was published in the Official Journal of the European Union (1). The Commission invited interested parties to submit their comments on the aid.

(2) By the same letter dated 18 August 2020, the Commission informed Portugal that it had decided not to raise objections to individual aid to SATA in the form or public guarantees or loans in an amount not exceeding EUR 133 million of liquidity needs related to the provision of public service obligations related to air transport to the Azores Region and to the operation of services of general interest in the airports in the same Region, on the grounds that it was compatible with the internal market pursuant to Article 107(3)(c) and Article 106(2) TFEU.

(3) On 17 February 2021, Portugal submitted a restructuring plan for SATA, which was updated on 10 March 2021. On 14 April 2021, Portugal notified its intention to grant restructuring aid supporting the restructuring plan.

(4) By letters dated 29 March 2021 and 16 April 2021, the Regional Government of Azores requested that the guarantees on loans that the Commission authorised on 18 August 2020 continue until 18 November 2021 and that more guarantees up to an additional amount of EUR 122,5 million be authorised for a seven-month period, pending the assessment of the restructuring plan.

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

(6) SATA is a Sociedade Anónima (limited liability company) (3) and holding of other companies based in the Azores Autonomous Region of Portugal (the ‘Region’). SATA employs 1.400 persons, of which 1 150 locally in the Region and 250 in Lisbon. SATA was incorporated in 1941 and is fully owned by the Government of the Region. SATA controls SATA Internacional — Azores Airlines, S.A. (‘Azores Airlines’), SATA — Gestão de Aeródromos, S.A. (‘SATA Gestão de Aeródromos’ or ‘SGA’), as well as Azores Vacations America and Azores Vacations Canada (now closed).

(7) SATA provides air transport passenger and cargo services on routes under public service obligations (‘PSO’) (4), or on a commercial basis. SATA serves the nine islands of the Region through inter-island air transport of the Azores Archipelago, for a total of 14 routes, under a PSO entrusted exclusively to SATA by means of a 5-year public service contract including compensation. SATA was the only airline that submitted a bid for these routes in 2015. The contract has been prolonged several times (5) and expires on 30 September 2021 (6). In 2019, SATA operated more than 15 000 flights, with six Dash Bombardier planes which carried around 766 000 passengers.

(8) Azores Airlines was incorporated in December 1990 and has an administrative hub in Ponta Delgada and one operational base in Lisbon. Azores Airlines operates i) three PSO routes connecting to mainland Portugal the five gateways of the Azores (São Miguel, Terceira, Santa Maria, Horta and Pico islands) (7), ii) a PSO route linking Ponta Delgada to Funchal (Madeira island) (8) 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. In 2019, Azores Airlines operated around 7 000 flights, through eight medium course Airbus 320 planes –two in ACMI agreement- and one Airbus 330 serving around 946 000 passengers.

(9) Even if the abovementioned four PSO routes are open to all operators willing to comply with the obligations imposed (9), Azores Airlines is the only airline fulfilling them. Portugal explains that the decision to fulfil the PSOs on these routes is not based on economic profitability, but rather on the sole shareholder’s interest in ensuring the continuity of such routes for reasons of public interest. Although Azores Airlines has been experiencing operational deficits in these four PSO routes, it continues to operate these routes without compensation. At present, the Portuguese Republic, together with the Region, is assessing the situation of these four PSO routes and their possible modifications in the future whilst ensuring compliance with Regulation 1008/2008 (10). In addition, on 27 March 2021, an emergency COVID PSO was imposed on two routes (Lisbon — Horta — Lisbon and Lisbon — Santa Maria — Lisbon) for 2021 the IATA summer season.

(10) SATA Gestão de Aeródromos, incorporated in 2005, manages the airports 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 in Azores that the Vinci Group operates. The concession awarded to SGA in relation to the services of operation and management of the airfields of Graciosa, Pico, São Jorge and Corvo, sets forth a compensation for its service of general economic interest (‘SGEI’) to be paid to SGA for each year of duration of the contract. The compensation for the period from 2020 until 2025 has been set at EUR 17 million.

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

(12) In addition to SATA, Transportes Aéreos Portugueses S.A. and Ryanair serve commercial routes between the Azores archipelago and the rest of the territory of the Union, whilst Arkefly and Jetairfly operate seasonal charter flights. As to direct routes, Ryanair connects the Azores with Lisbon, 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).

(13) In the opening decision, the Commission concluded that SATA presented a total negative equity amount of EUR 230 million in 2019, decreasing every year from EUR 55,8 million negative equity in 2014. This showed that at least half of its subscribed share capital had disappeared [ ]. The Commission also concluded that SATA fulfilled the criteria [ ]. The opening decision thus concluded that at the time of its adoption and since [ ], the beneficiary qualified as an undertaking in difficulty pursuant to points 20(a) and (c) of the R&R Guidelines (11). The equity position and financial situation of SATA has further deteriorated since August 2020. Revenues in 2020 [ ] compared to 2019 and SATA’s equity as at end 2020 is expected to have amounted to EUR -[ ] million. Likewise, Portugal confirms that SATA continues to fulfil [ ].

(14) SATA’s financial situation is at present characterised by [ ]. In that context, the Portuguese authorities requested that the guarantees on EUR 133 million loans authorised in the opening decision continue until 18 November 2021 and that more guarantees up to an amount of EUR 122,5 million be authorised, pending the assessment of the restructuring plan. This covers the projected liquidity needs that are critical to maintain the essential functions of connectivity provided by the beneficiary, namely intra-islands PSOs, PSOs routes with mainland (12) and the SGEI provided by SGA in managing the airports (13). This amount excludes the costs of commercial routes of SATA and of the Azores Airlines, as well as the liquidity needs of Azores Vacations America and Azores Vacations Canada –now closed-.

(15) The restructuring aid supports the implementation of a restructuring plan that is already being implemented, coming to an end in 2025. The plan is premised on market recovery of pre-COVID levels by 2023 (Western Europe, regional and international) and the Azores being an increasingly attractive destination for tourism, with boosted demand from the Portuguese diaspora in North America.

(16) In terms of fleet capacity and use, SATA would phase out legacy planes and reduce the number of aircrafts [ ]. By 2025, the SATA group would be operating [ ] (through Azores Airlines) [ ] and [ ] (through SATA) [ ]. The plan mentions however that the regional fleet of SATA [ ]. Azores Airlines will [ ]. Azores Airlines would [ ], improving connectivity within the network in the archipelago responding to a steady increase in demand. In the shorter term until demands recovers, SATA would [ ].

(17) Complementary to improved operations and schedules, the restructuring plan rests on four pillars that would contribute to reducing the operating cost base: [ ]. These measures combined would lead to [ ]. The aggregate cost reductions expected to be realised by 2025 from restructuring measures are quantified at recital (21).

(18) The implementation of the restructuring plan triggers total net costs of EUR [ ] million until 2028 including repayment of bank loans, operating costs and capital expenditure for parts of aircraft. The projections show an aggregated amount of shortage of operational net cash flow in the amount of EUR [ ].

(19) Portugal stresses that due to the deteriorated financial situation and the severe impact of the COVID-19 outbreak in the sector and in the economy, SATA is unable to proceed to any debt reorganisation and private capital raising without support from the State. However, Portugal considers that, [ ].

(20) The funding of the restructuring aid will be provided by the Azores Region from its budget...