Blue Air has requested the Government to approve the necessary normative act in a timely manner for the issuance of a state guarantee for a bank loan, intended to cover the losses generated for the company by the force majeure situation created by the COVID-19 pandemic and for the success of Blue Air’s recovery plan under preventive concordat conditions.
After three years of massive investments in routes and slots at major European airports, the company became profitable last year, with its shares valued in December 2019 at 1.6 billion RON, or over 350 million EUR.
In the current situation, amid limitations related to the state of emergency established by the authorities, Blue Air was forced to suspend regular flights between March 20 and July 30, 2020, and to significantly reduce its level of operation for the entire year 2020.
Faced with this force majeure situation, in order to cover the losses created and to be able to continue its activity, on March 13, 2020, Blue Air formally requested support from the Romanian state. Six weeks later, after completing all inter-ministerial procedures and pre-notifying the European Commission, the Government approved, through the Memorandum adopted in the meeting of April 23, 2020, the granting of a 300 million RON loan to Blue Air for the purpose of covering direct losses generated by the force majeure situation caused by the Covid-19 pandemic.
Within this process, Blue Air demonstrated that it has the capacity to resume activity under profitable conditions and to repay this loan in a maximum of 6 years, according to the Temporary Framework established by the Commission for this purpose.
Additionally, to avoid closing operations during the state of emergency, on April 29, 2020, the Inter-ministerial Committee for Financing, Guarantees, and State Insurance approved the granting by Eximbank of a 30 million RON bridge loan to Blue Air for the payment of carbon certificates necessary to fulfill the compliance obligation deriving from European conditionalities, with the source of repayment being the state-granted loan.
Furthermore, to ensure the resumption of regular flights in good conditions starting July 1, on June 29, Blue Air filed a request with the Bucharest Tribunal to open the preventive concordat procedure—a request admitted by the judge on July 6, 2020. This step ensures the protection of the company and the honoring of all obligations assumed towards its passengers, employees, and partners, and provides them and the Romanian state with additional comfort regarding Blue Air’s capacity to continue its activity under profitable conditions.
Frequently Asked Questions
Why did Blue Air request a state guarantee?Blue Air requested the guarantee to cover massive losses caused by flight suspensions during the COVID-19 pandemic and to support its recovery plan.
What loan amount was approved by the Government?The Government approved a 300 million RON loan to compensate for direct losses suffered by the company during the state of emergency.
What is the preventive concordat procedure opened by Blue Air?It is a safeguarding procedure that allows the company to protect its operations and honor obligations to passengers and partners while restructuring.