Aid to TAP avoided ‘negative repercussions’ on economy

The European Commission on Thursday said that state aid of 1.2 billion euros to TAP avoided negative repercussions on important segments of the Portuguese economy by ensuring the activity of the airline and connectivity of Portugal.

In a reply sent by Executive Vice-President Margrethe Vestager on behalf of the European Commission to Social Democrat MEP Cláudia Monteiro de Aguiar, the head of the EU executive argued that the state aid in question had allowed the continuation of TAP’s activities and the connectivity of Portuguese territory, thus avoiding the negative repercussions on important segments of the Portuguese economy.

“In addition to the specific routes or locations served by TAP, the Commission concluded that, in general, the notified aid contributed to an objective of common interest of the Union,” said Margrethe Vestager, who is in charge of the European Competition portfolio, in the reply to which Lusa had access.

The reply comes after Cláudia Monteiro de Aguiar asked the European Commission about Portuguese state aid to TAP, asking whether the expected restructuring of the company would ensure a fair geographical distribution of the routes or could lead to a reduction in the operation.

In the question tabled in mid-June and endorsed by the rest of the PSD group in the European Parliament, Social Democrat members of parliament asked whether the conditions put forward by the Portuguese government for intervention in TAP take into account the fair distribution of its routes to and from Faro and Porto airports and the principle of territorial continuity.

They also asked whether it was guaranteed in this intervention that the restructuring will not result in a reduction in the number of routes and timetables between the mainland and its islands and an increase in the price of their fares.

These questions were not specifically answered by Margrethe Vestager, who reiterated that the Portuguese authorities have undertaken that TAP will repay the loan or present a restructuring plan within six months to ensure the future viability of the company.

The Commission is still in constructive contact with the Portuguese authorities, the Vice-President of the institution said.

On 10 June, the EU executive gave the ‘green light’ for Portuguese emergency aid to the airline TAP, state support of 1.2 billion euros to meet immediate liquidity needs given the Covid-19 pandemic, with predetermined conditions for reimbursement.

As TAP was already in a weak financial situation before the pandemic, the company was not eligible for state aid under the more flexible European rules due to the outbreak, aimed at healthy companies, so the Portuguese aid was assessed by Brussels under the rescue and restructuring guidelines, which allow countries to support companies in difficulty, provided that certain conditions are set.

Cláudia Monteiro de Aguiar, who took the initiative, is a member of the European Parliament’s Transport and Tourism Committee.