Portugal has to prove that capital increases in SATA were not state aid

in News · 29-08-2020 16:00:00 · 0 Comments
Portugal has to prove that capital increases in SATA were not state aid

The European Commission says Portugal must prove that the three recent capital increases in the Azorean carrier SATA were not state aid to ensure full compliance of the 133 million euro support.

"It is up to Portugal to demonstrate that the capital increases as of 2017 were not state aid," it says. This position is based on the fact that, in the case of state aid in the last ten years, new financial support will be prevented.

The position appears in the letter sent by the executive vice-president of the European Commission Margrethe Vestager, responsible for competition policy, to the Minister of Foreign Affairs, Augusto Santos Silva, regarding the 'green light' from Brussels to a Portuguese state aid of 133 million Euros to the Azorean airline SATA.

The support consists of a State guarantee for a loan from private entities.

The Lusa agency had access to the letter, dated 18 August, at the time of the decision of the community executive, and it was also stated that an investigation would be opened to assess compliance with community standards in other public support to the company.

The investigation is about three capital increases between 2017 and 2020, which will inject nearly 130 million Euros into the carrier by 2023.

Portugal has advocated that the Regional Government of the Azores, as SATA's sole shareholder, has acted as a private investor operating under market conditions.

The country may, however, invoke "exceptional and unpredictable" circumstances for which SATA could not be held responsible to justify the financial injections, acknowledged Margrethe Vestager.

SATA's financial difficulties have persisted since at least 2014, when the airline, wholly owned by the Regional Government of the Azores, began to register losses, however aggravated by the effects of the new coronavirus pandemic, which had a huge impact on the aviation sector.

The current board of directors of the Azorean carrier took office in January and committed to presenting a strategic and business plan by the end of the first quarter of the year, but the Covid-19 pandemic forced a reassessment of the document.

In July, SATA stressed that "the context caused by the pandemic had a very significant impact" and, due to the "almost total cessation of activity, all possible measures were implemented at the management's disposal, in a scenario where the preservation of employability was fundamental".

Over the next six months, in accordance with EU regulations, SATA will, together with the Government of the Azores and the European Commission, work on a business plan that ensures the economic and financial sustainability of the group and guarantees services of general economic interest in inter-island air transport and with the outside world.


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