Brussels is also preparing a new amendment to these rules that would allow Member States to enter the capital of affected companies, thus allowing their nationalization
The European Commission has pointed out that member states can grant aid to airlines affected by the coronavirus crisis, such as those that France and the Netherlands intend to adopt with Air France and KLM, but recalled that any support must respect the rules of the internal market to do not distort competition.
When asked at a press conference about these two cases, the Competition spokesperson for the Community Executive, Arianna Podesta, has assured from a general point of view that the time frame on State aid allows governments to give «specific and proportionate aid”:
«As long as they also limit unnecessary distortions of competition in the internal market. The goal is this,» he added, stressing that Brussels is «very aware» of the «difficult situation» facing the consumer sector. aviation.
The aviation sector is one of the hardest hit by the crisis stemming from the Covid-19 pandemic and precisely this Monday nine member states, including Spain, have emphasized in a joint letter that it is «essential for tourism» and for the future of European economies. Along these lines, they have urged facilitating access to airline liquidity.
Since the beginning of the crisis, the European Commission has relaxed state aid rules so that governments can inject funds into companies in difficulties, whether through direct aid, loans or tax deferrals.
Brussels is also preparing a new amendment to these rules that would allow Member States to enter the capital of affected companies, thus allowing their nationalization. But there are doubts about the effects that this type of movement can have on competition in the single market, since there are countries with more margin to approve this type of aid than others.
In this context, the Community Executive has proposed to the capitals a new extension of the time frame of State aid, so that companies can write down as subordinated debt the loans they receive from their governments. This measure, like the recapitalization of companies, is still in the draft phase and awaiting final adoption by the community authorities.