Romanian flag-carrier Tarom has secured European Commission clearance for a financial restructuring package, which it will use for initiatives including fleet renewal.
The Romanian transport minister, Sorin Grindeanu, says the package amounts to €95.26 million ($102 million) of which €49.53 million represents rescue aid – plus interest – granted in 2020.
Along with fleet modernisation, he says, the funding will support “optimisation” of commercial policy and the carrier’s network.
It will also contribute to efficiency improvements in aircraft maintenance activities as well as digitisation efforts, including ticket distribution, across the company.
Grindeanu adds that the financing will cover a “liquidity deficit” for this year.
The Commission says the measures will allow Tarom to “restore its long-term viability” while “minimising” distortion of competition.
“To limit any possible competition distortions triggered by the public support, Tarom will significantly downsize its number of routes and aircraft,” says competition commissioner Margrethe Vestager.
Romania’s government had notified the Commission of a restructuring plan in May 2021, during the disruption of the Covid-19 pandemic.
This proposed restructuring became the subject of an in-depth investigation the following July, and the government subsequently amended the plan in order to address competition concerns.
The restructuring comprises writing-off around €49.5 million in debt – the rescue aid – plus a capital injection of about €45.7 million.
According to the Commission, the package supports regional connectivity objectives and addresses the issues which have led to financial pressures on Tarom, by helping the carrier to reduce costs and update the fleet.
It adds that the measures are “proportionate” because Tarom is providing a contribution of €77.6 million through aircraft sale and finance lease proceeds.
Tarom will reduce the number of aircraft and routes it operates across the restructuring period – running to the end of December 2026 – in order to limit its market presence and mitigate competitive distortion.
