Support for the Romanian Air Company TAROM
The state aid approved by the European Commission saves National Air Company TAROM from bankruptcy. After 17 years of losses, the company could finally become profitable.
Mihai Pelin, 30.04.2024, 14:03
The European Commission (EC) has given its consent for TAROM, the Romanian National Air Company, to receive a state aid for restructuring worth approximately 95 million euros. According to the Community Executive, the aid will allow the company to restore its long-term viability. However, according to Brussels, in order to limit the possible distortions of competition generated by this state aid, TAROM will significantly reduce the number of routes and aircraft. The measures in the restructuring plan provide for the cancellation of a debt of more than 49 million euros, corresponding to the value of a rescue aid approved by the EC in February 2020, and a capital injection of almost 46 million euros. TAROM also has its own contribution of over 77 million euros, money from the sale of aircraft and from a financial leasing contract concluded under market conditions. The European Transport Commissioner, Adina Vălean, said that the approval of the aid represents a health certificate of the company and an advantage in finding investors for the Romanian national air carrier.
According to the European Commissioner, such a restructuring plan has certain criteria that must be met, and the EC saw it as ‘very solid’ and likely to make the company profitable again in the future. As regards a possible personnel restructuring at TAROM, Adina Vălean specified that the European Commission did not indicate this. In his turn, the Minister of Transport, Sorin Grindeanu, said that the aid approved by the European Commission will allow TAROM to avoid bankruptcy. He reiterated the desire of the Romanian authorities to save the company, which has been facing financial difficulties for several years. It is a very important step for TAROM, one of Romania’s flagship companies, which will start an extensive process of recovery and reorganization, and the aid that the EC approved demonstrates the good path the company is on at the moment, its representatives also emphasized.
The recovery plan aims at several major lines of action, such as the renewal of the aircraft fleet, increasing commercial efficiency by optimizing flight routes and adapting commercial policies, increasing organizational efficiency, by reorganizing processes, reconfiguring aircraft maintenance activities, digitizing the company and restructuring support functions. Thus, the services provided will be modernized and will have a client-centered approach, focusing on obtaining sustainable additional income. At the same time, the aim is to optimize costs, by improving the use of resources. The Romanian National Air Company – TAROM was founded in 1954 and operates under the authority of the Ministry of Transport, being a member of the SkyTeam Alliance since 2010. It owns a fleet of 18 aircraft and has in its portfolio a number of 70 destinations operated with own aircraft or serviced by its partners. (EE)
