State aid: Commission approves €1.2 billion rescue loan; opens investigation into €3.2 billion Portuguese further restructuring aid in favour of TAP

(Source: European Commission)

By two separate decisions adopted today, the European Commission has (i) re-approved €1.2 billion rescue aid to Transportes Aéreos Portugueses SGPS S.A. (“TAP Air Portugal”), and (ii) opened an investigation to assess whether the restructuring aid Portugal plans to grant to TAP is in line with EU rules on State aid granted to companies in difficulty.

The opening of an investigation gives Portugal and interested third parties the opportunity to submit comments. It does not prejudge the outcome of the investigation.

Executive Vice-President Vestager, in charge of competition policy, said: “We have adopted a new decision re-approving rescue aid for the Portuguese TAP airline, following the recent judgment of the General Court annulling the Commission’s original decision. This ensures that the disbursed rescue aid to TAP will not have to be repaid, while efforts continue to develop a sound restructuring plan that ensures TAP’s viability in the long-term, without the need for continued State support. In this context, we have also opened an investigation into the restructuring aid notified by Portugal. We will continue our constructive engagement with the Portuguese authorities on this issue.”

At the time of the rescue aid TAP SGPS was a holding and a parent company of TAP Air Portugal, a major network airline operating in Portugal. In 2019, with a fleet of 108 planes, TAP Air Portugal served 95 destinations in 38 countries, carrying over 17 million passengers from its main hub, Lisbon, and other Portuguese airports to various international destinations.

The rescue aid measure

On 10 June 2020, the Commission adopted a decision approving a €1.2 billion rescue loan to TAP SGPS, finding that the aid was in line with the requirements of the Commission’s Guidelines on rescue and restructuring aid (“R&R Guidelines”).

By a judgment of 19 May 2021 (case T-465/20, Ryanair/Commission), the General Court of the European Union annulled the initial rescue aid decision. In particular, the General Court found that the Commission had failed to indicate in its decision whether TAP SGPS belonged to a larger business group and resulting possible implications for its financial difficulties. The General Court gave the Commission a possibility to adopt a new decision within two months, addressing these shortcomings. The decision adopted today re- approves the rescue aid and further specifies the reasons for approving the aid, in connection with the situation of the TAP group and its shareholders in June 2020.

TAP’s restructuring plan

On 10 June 2021, Portugal formally notified to the Commission €3.2 billion restructuring aid, with the aim of financing a restructuring plan of TAP Group through TAP Air Portugal.

The restructuring plan sets out a package of measures for streamlining TAP Air Portugal operations and reducing costs. In particular, the restructuring plan provides for a split of TAP SGPS businesses into (i) a perimeter of non-core assets to divest in the course of the restructuring, and (ii) the airlines TAP Air Portugal and Portugalia, that will both be restructured. TAP Air Portugal will reduce its fleet, streamline its network and adjust to reduced demand before 2023. In parallel, TAP is renegotiating terms with suppliers and lessors, and is reducing staff costs.

Portugal plans to finance the restructuring with €3.2 billion aid. This support would take the form of approximately €2.73 billion of equity and quasi equity measures, which include the €1.2 billion rescue loan to be converted into equity. Additional support of approximately €512 million, in the form of a State guarantee to market loans, may be granted by Portugal as of 2022, in case TAP Air Portugal cannot access the financial markets in 2023-2025 as currently expected (thanks to an expected ratio of net financial debt to equity allowing it to access market finance without any State guarantee).

The Commission has opened an in-depth investigation to further assess the compliance of the proposed restructuring plan and of the related aid with the conditions of the R&R Guidelines.

In particular, the Commission’s in-depth investigation will examine:

  • whether TAP or market operators would sufficiently contribute to the restructuring costs, thus ensuring that the restructuring plan does not overly rely on public funding and that therefore the aid is proportionate; and
  • whether appropriate measures to limit the distortions of competition created by the aid would accompany the restructuring


EU State aid rules, more specifically the Commission’s Guidelines on rescue and restructuring aid, enable Member States to support companies in difficulty, under certain strict conditions. In particular, rescue aid may be granted for a period of up to six months. Beyond this period, either rescue aid must be reimbursed or Member States must notify a restructuring plan to the Commission, for assessment under the State aid rules. In order for restructuring aid to be approved, the plan must ensure that the viability of the company can be restored without continued State support, that the company contributes sufficiently to the costs of its restructuring and that distortions of competition created by the aid are addressed through compensatory measures, including in particular structural measures.

The non-confidential version of both decisions will be made available under the case numbers SA.57369 and SA.60165 in the State Aid Register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.

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