The European Commission approved Sweden’s half-billion euro support scheme for airlines on Saturday (11 April), in what is one of the first major forays into bailing out Europe’s coronavirus-hit airlines.
Sweden’s €455 million package of loan guarantees is open to any airline that has held a licence to operate in Swedish airspace as of 1 January. The government estimates that as many as 20 companies will be eligible for the money.
Scandinavian Airlines, which is partly owned by the Danish and Swedish governments, is chief among those carriers set to benefit, as well as smaller operators of ambulance flights and helicopter services.
EU competition boss Margrethe Vestager said that “the coronavirus outbreak is having an unprecedented impact on the aviation sector in Europe and worldwide” and added that the Swedish scheme will provide airlines with much-needed liquidity “in these tough times”.
Vestager’s services approved the bailout under the Commission’s new state aid framework, which has relaxed the EU executive’s normally stringent criteria in order to help governments mitigate the economic impact of the virus outbreak.
Although the Commission has loosened the purse strings, there are still conditions. The Swedish scheme got the green light because the loan guarantees will only be offered until the end of this year and will only last for a total of six years.
A new set of state aid guidelines is set to be adopted this week, which will extend the EU executive’s antitrust leniency to recapitalisation measures. The 27 member states are currently analysing the draft proposal.
The Commission insists that restructuring company debt must remain a last-resort course of action though and will keep tabs on any countries that choose to go down that path.
“We will make sure that taxpayers are sufficiently remunerated for their investment, and companies that receive capital support are subject to controls and governance provisions that limit possible distortions to competition,” Vestager said in a statement.
If the new rules are approved, it will likely open the door for more widespread state interventions in the airline industry, which is struggling to cope with an almost total reduction in demand for air travel as a result of the virus crisis.
Belgian flag carrier Brussels Airlines indicated last week that it would receive state aid to help it ride out the slump.The Lufthansa-subsidiary did not confirm what form the assistance would take, as rumours of nationalisation have emerged.
The Italian government has decided to bring perennial struggler Alitalia into public ownership after the crisis scared off potential buyers for the airline, while Air France-KLM is likely to get aid from the French and Dutch governments, both of which own a 14% stake.
France already secured EU approval for its own airline-boosting measure last month, which will defer certain aeronautical taxes until next year and offer firms a 24-month-long grace window in which to pay them back.
Belgium has also been given the green light by the Commission for a scheme aimed at helping Wallonia’s two main airports, Charleroi and Liege. Their operators will have more time in which to pay costly concession fees.