The European Commission has approved, under EU State aid rules, three Finnish measures, with an overall budget of €350 million, to support airport operator Finavia in the context of the coronavirus outbreak.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Finavia, as many other companies active in the aviation sector, has been hit very hard by the outbreak and has been suffering significant losses as a result of the travel restrictions that Finland and other countries had to impose to limit the spread of the virus. This €350 million support package will enable Finland to support the airport operator in different forms, namely a capital injection, a subordinated loan and a measure to partly compensate the company for the damages directly linked to the outbreak. We continue working in close cooperation with Member States to ensure that national support measures can be put in place as quickly and effectively as possible, in line with EU rules.”
The Finnish measures
Finavia is a major airport operator in Finland. It manages 21 airports, including the airport of Helsinki.
In 2020, Finavia experienced significant losses, due to the significant drop in travel demand and the travel restrictions that Finland and other countries had to impose to limit the spread of the coronavirus. These factors continue deteriorating the financial situation of Finavia, putting the company’s equity and liquidity position at risk.
Finland notified to the Commission three measures in favour of Finavia, namely (i) a €249 million capital injection,(ii) a €33 million subordinated loan, both under the State aid Temporary Framework, and (iii) a €68 million a measure to compensate the company for the damage directly suffered as a result of the coronavirus outbreak under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU).
The Finnish support measures under the Temporary Framework
The Commission assessed the capital injection and subordinated loan in favour of Finavia under the State aid Temporary Framework, in line with the notification by Finland.
With respect to the capital injection, the Commission found that the recapitalisation measure notified by Finland is in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework. In particular, as regards:
- Conditions on the necessity, appropriateness and size of the intervention: the measure will not exceed the minimum needed to ensure the viability of Finavia and will not go beyond restoring its capital position before the coronavirus, even taking into account the damage compensation and the subordinated loan that the company will receive.
- Conditions on the State’s entry, remuneration and incentives to exit from the capital of the company: the recapitalisation aid will prevent an insolvency of Finavia, which would have serious consequences on Finnish employment, connectivity and foreign trade. Finland will receive an appropriate remuneration for the investment. There are appropriate mechanisms to incentivise Finavia to redeem the State’s equity participation obtained as a result of the recapitalization.
- Conditions regarding governance and acquisition ban: until at least 75% of the recapitalisation is redeemed (i) a strict limitation of the remuneration of Finavia’s management, including a ban on bonus payments, is applied, and (ii) the company is prevented from acquiring a stake of more than 10% in competitors or other operators in the same line of business.
- Public transparency and reporting: Finavia will have to publish information on the use of the aid received, including on how the use of the aid received supports its activities in line with EU and national obligations linked to the green and digital transformation.
With respect to the subordinated loan, the Commission also found that the measure is in line with the conditions set out in the Temporary Framework. In particular, (i) the loan will last for maximum six years; (ii) it will be granted before 31 December 2021; and (iii) the interest rate will ensure minimum remuneration, in line with the conditions of the Temporary Framework.
The Commission concluded that the subordinated loan and capital injection are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the general principles as set out in the Temporary Framework.
On this basis, the Commission approved the measures under EU State aid rules.
The damage compensation measure
The damage compensation measure will take the form of a €68 million capital injection to compensate Finavia for the direct damage suffered from 16 March to 30 June 2020 due to the coronavirus outbreak and the measures that Finland and other countries had to impose to contain the spread of the virus.
The aid measure also includes a claw-back mechanism, whereby any possible public support in excess of the actual damage received by the beneficiary will have to be paid back to the Finnish State. The risk of the State aid exceeding the damage is therefore excluded.
The Commission assessed the measure under Article 107(2)(b) TFEU, which enables the Commission to approve State aid measures granted by Member States to compensate specific companies or sectors for the damages directly caused by exceptional occurrences. The Commission considers that the coronavirus outbreak qualifies as an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by the Member States to compensate for the damages linked to the outbreak are justified.
The Commission found that the Finnish aid will compensate damage that is directly linked to the coronavirus outbreak. It also found that the measure is proportionate as the compensation does not exceed what is necessary to make good the damage.
On this basis, the Commission concluded that the Finnish damage compensation measure is in line with EU State aid rules.