Ayuda estatal — Rumanía — Ayuda estatal SA.59344 (2021/C, ex 2021/N) — Rumanía — Ayuda de reestructuración a TAROM — Invitación a presentar observaciones en aplicación del artículo 108, apartado 2, del Tratado de Funcionamiento de la Unión Europea

• Section: Serie C

3.9.2021 ES Diario Oficial de la Unión Europea C 355/10

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

(1) On 24 February 2020, the Commission decided not to raise objections on State aid planned to be granted by Romania to TAROM in the form of a rescue loan for a maximum of six months amounting to RON 175 952 000 (ca. EUR 36,66 million). In that decision (2) (‘the rescue aid decision’), the Commission found that the loan constituted State aid to TAROM and considered that the aid was compatible with the internal market pursuant to the 2014 Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (3) (the ‘R&R Guidelines’) as rescue aid. In connection with the rescue aid, the Romanian authorities had committed to provide the Commission, within six months of the loan approval by the Commission, with a restructuring plan as set out in section 3.1.2 of the R&R Guidelines (see recital (69) of the rescue aid decision).

(2) On 24 August 2020, Romania submitted a first restructuring plan for TAROM (the ‘preliminary restructuring plan’). At the same time, Romania pre-notified its intention to grant restructuring aid to TAROM. Further to a number of exchanges with the Commission services, Romania submitted a new draft restructuring plan on 23 March 2021.

(3) On 28 May 2021, the Romanian authorities notified to the Commission the restructuring aid accompanying the new restructuring plan. The Commission sent a request for information prior to a call with the Romanian authorities on 10 June 2021. On the 10 June 2021, Romania submitted an amended version of Annex 2 — Report regarding the Restructuring Plan of the notification.

(4) TAROM is a Romanian airline headquartered in Otopeni, Ilfov. TAROM was set up as a State company in 1954. It was reorganised under the 1997 Government Ordinance and set up as a joint-stock company under the 1998 Law as Romania’s national air transport company (4). The Romanian State, represented by the Ministry of Transport, Infrastructure and Communications (‘Ministry of Transport’), owns directly 97,22 % of the shares. The remaining minority shareholdings are held by several public companies: National Airport Company Bucharest (‘CNAB’, 1,46 %), ROMATSA (Romanian Air Traffic Service Administration) (1,24 %) and Investment Fund Muntenia (0,08 %). TAROM is not part of a wider group of companies as it is an independent centre of decision-making within the State, not managed together with other State holdings. TAROM holds 50 % of shares in Romanian Fuelling Services S.R.L. and is a minority shareholder in several other companies (5).

(5) TAROM is mainly active in the air transport of passengers, cargo and mail. It currently has nearly 1 500 employees, out of which ca. 350 operate in the technical division (maintenance and repair operations). It has been a member of the SkyTeam alliance since 2010.

(6) TAROM is a single hub carrier, with its hub located at the OTP Bucharest Henry Coandă International Airport (‘Bucharest Otopeni Airport’ or ‘OTP Airport’). In 2019, TAROM carried over 3,1 million passengers to 41 own destinations (10 domestic and 41 international to elsewhere within the Union, the Middle East and North Africa) with a fleet of 25 aircraft. As an effect of the global COVID-19 pandemic, in 2020 TAROM lost 73 % of its pre-pandemic traffic, with only 0,9 million passengers on 38 routes. In addition to scheduled flights, it also offers transport services to tour operators (around 5 % of total traffic). Moreover, it provides maintenance services to KLM, TAP, Air Serbia and other airlines.

(7) Over the past five years, TAROM’s financial situation has significantly deteriorated, in particular with regard to profit. The company has been loss making since at least 2008 and, as reflected in Table 1, it has registered significant losses in recent years. TAROM’s subscribed share capital was EUR 760,00 million in 2018, EUR 753,31 million in 2019, and EUR […] million in 2020 (6). Its accumulated losses in 2020 amount to EUR […] million (7). Hence, at least for the past two years prior to the granting of the rescue aid, the accumulated losses exceeded half of TAROM’s estimated share capital so the company was an undertaking in difficulty; that situation has not changed, and TAROM is still in difficulty at present.

(8) According to Romania, TAROM’s deteriorating financial situation in recent years is mainly due to an ageing and non-homogenous fleet (8) involving high maintenance costs and high fuel charges, but also to the costs derived from inefficiencies in operations. This, in turn, negatively affected the company's operational and overall profit, operational cash flow and cash resources. The failure by the company’s management to address those issues, coupled with intense competition from low-cost carriers, has led to an acute liquidity shortage, for which rescue aid was granted following the approval by the Commission on 24 February 2020 (see recital (1)). In addition, on 2 October 2020 TAROM received EUR 19,3 million compensation for exceptional damage caused by the COVID-19 pandemic (9) .

(9) At present, the financial situation of TAROM is already very difficult and the long-term survival of the business fully depends on restructuring aid and on the successful implementation of a solid restructuring plan.

(10) Following the rescue aid decision, on 28 May 2021 Romania notified EUR 190,7 million restructuring aid consisting of (i) a EUR 40,6 million debt write off by Romania of the loan granted as rescue aid (EUR 36,7 million principal and its corresponding interest), (ii) a EUR 92,9 million capital injection by Romania, and (iii) a EUR 57,2 million grant.

(11) The restructuring plan encompasses a restructuring period of five years, from 2021 to 2025.

(12) The restructuring plan foresees TAROM posting profits as of 2024, attaining a return on capital employed (‘ROCE’) of […] % in 2024 and […] % by 2025.

(13) More specifically, based on the projections provided by Romania, in the baseline scenario TAROM will have a negative return on assets (‘ROA’) in 2022 and 2023, as TAROM will incur losses. In 2021, the result is positive as a result of the restructuring aid. Starting with 2024, the ROA will turn positive, as TAROM will start generating profits. In 2024 the ratio is slightly lower due to the fact that the profit generated is not commensurate to its asset base (increased because of the right to use assets from the B-MAX fleet). After 2024, the ROA will reach values that are in line with the competitors’ results included by Romania in the peer group (10).

(14) In the baseline scenario, TAROM is expected to achieve in 2024 a ROCE value close to the overall peer group average (~10 %) and gradually increases that value in order to get close to its main competitors’ results, Wizz Air and Blue Air. In the restructuring period, continuous cost management (i.e. cost reductions through improved efficiency, renegotiation of contracts, productivity improvements) is planned to enhance structural profitability. In addition, investments in the renewal of fleet will replace more costly and less efficient aircraft. The net profit margin will gradually increase towards the end of the restructuring period to […] % in 2024 and […] % in 2025, in line with the company’s main competitors. Table 1 Selected financial data according to the restructuring plan — Evolution of TAROM’s return indicators before and during the restructuring period (baseline scenario) Summary of main financial indicators in baseline scenario Historical period Restructuring period 2019a 2020e 2021f 2022f 2023f 2024f 2025f Operating revenues (million EUR) 285,28 […] […] […] […] […] […] EBITDA (million EUR) 12,20 […] […] […] […] […] […] Adjusted EBITDA (million EUR) 12,20 […] […] […] […] […] […] EBIT (million EUR) (32,43 ) […] […] […] […] […] […] Net result (million EUR) (35,73 ) […] […] […] […] […] […] Total equity (million EUR) 96,96 […] […] […] […] […] […] Total capital employed [6] (million EUR) 158,04 […] […] […] […] […] […] ROA [1] (%) -12,54 % […] […] […] […] […] […] ROCE [2] (%) -20,52 % […] […] […] […] […] […] ROE [3] (%) -36,85 % […] […] […] […] […] […] Adj. EBITDA margin [4] (%) 4,28 % […] […] […] […] […] […] EBIT margin [5] (%) -11,4 % […] […] […] […] […] […] Net profit margin -12,52 % […] […] […] […] […] […] Source: Notification, Annex 2 — Report regarding the restructuring plan, page 186.

(15) The restructuring plan includes a wide range of actions scheduled to be implemented until 2025, grouped into four broad categories (11) as follows: (i) fleet renewal: consisting in the phasing in of new and phasing out of old aircraft, leading to a change from 29 planes in 2020 to 17 planes as of 2024 onwards (12), with most of the new planes (5 new jets B-MAX entering the fleet in 2023) but overall similar capacity in terms of available seat kilometres (ASK) at the end of the restructuring, as smaller aircraft are being replaced by bigger models;

(ii) commercial optimisation measures: route optimisation (translated into optimisation of flight schedules and frequencies, optimal aircraft allocation, closing of unprofitable routes, etc.), changes in the commercial policy related to the unbundling of services (paid catering) by introducing an ancillary revenues strategy similar to low cost carriers in order to reduce ticket prices, increased focus on charter flights, closing of owned ticketing agencies, marketing actions and communication;

(iii) organisational efficiency measures: resizing of core structure to adapt to the current and future level of activity, optimisation of the Technical Division (following the...