BRUSSELS (Reuters) - The European Commission said on Wednesday it had approved Portugal’s plan for a rescue loan for Transportes Aereos Portugueses (TAP) and a partial state recapitalisation of Finnair (FIA1S.HE) after both airlines were hit by the COVID-19 pandemic.
Rescue aid can be granted for a maximum of six months and in Portugal’s case, the authorities have committed that TAP will reimburse the 1.2 billion euro ($1.36 billion) loan or submit a restructuring plan in that time.
“This 1.2 billion euros Portuguese rescue aid will help TAP Air Portugal face its liquidity needs and pave the way for its restructuring to ensure its long-term viability,” Commission executive vice president Margrethe Vestager said in a statement.
Airlines across the world have been trying to raise cash and cut costs after lockdowns to contain the virus pandemic brought global air travel almost to a halt.
The Commission, which oversees competition policy in the European Union, later said it had also cleared Finland’s plans to contribute to a recapitalisation of Finnair by subscribing to new shares in a rights issue to raise 500 million euros.
“The substantial participation of market investors in the transaction is a positive signal that the Commission strongly encourages, as it limits the distortion of competition while contributing to the recovery of undertakings affected by the coronavirus outbreak,” Vestager said.
Reporting by Philip Blenkinsop. Editing by Jane Merriman