EC analyses further compensation measures for TAP

The European Commission is considering new “compensation measures” for airline TAP due to the impact of Covid-19 on air traffic, promising a decision this week to be released alongside that on restructuring.

“We are working hard right now for a decision this week [on the restructuring plan] and, in addition, also on compensation measures because they [TAP] need compensation for some of the things they suffered because of Covid-19, and both things should happen this week,” said European Commission executive vice-president in charge of competition Margrethe Vestager.

Speaking at a press conference in Brussels on new state aid guidelines for climate, environment and energy, she said, without specifying: “What I am talking about is that because of Covid-19 there have been limitations to travel and [airlines] are being compensated for the losses they have had because of the restrictions.

“This is one of those compensatory measures, and we will make sure that they can get the money,” Margrethe Vestager concluded.

Also, today, the European head of oversight said she foresaw long-term viability for TAP and promised a decision this week on the restructuring plan, warning that it should involve remedies.

Vestager’s statements come after Finance Minister João Leão revealed earlier this month that discussions with the European Commission on the TAP restructuring plan were in the final stages. He expected the restructuring plan to be approved before Christmas.

The government submitted TAP’s restructuring plan to the European Commission a year ago and has since implemented measures such as reducing staff numbers.

After the European Commission approved state support of up to €1.2 billion for TAP on June 10 2020, the company had six months to present a restructuring plan to convince Brussels that the company has future viability.

In August this year, the European Commission acknowledged that the €3.2 billion restructuring aid for TAP violates competition rules. This complaint has been repeated by other airlines such as Ryanair.

Brussels also said it doubted that the €3.2 billion support would guarantee its viability for good, although it recognised the importance of the Portuguese state rescuing the airline.