THE LEVEL PLAYING FIELD IN CRISIS MODE 65 aid was needed to prevent the market exit of companies that had been viable before the COVID-19 outbreak. The SA.59812 case135 is a recent example of large amounts recapitalisation aid granted a significant player of the tourism market. In the decision, Commission approved a massive financing package of maximum 1.25 billion euros to TUI (equity and hybrid capital, half of which was conditionally granted), a major German-based conglomerate operating hotels, cruise ships, airlines and travel agencies in multiple Member States. Recognising that the beneficiary had been severely and negatively affected by the travel restrictions, the Commission authorised the aid as the beneficiary was facing insolvency. According to the Commission’s press report, the recapitalisation aid measure was used because the liquidity aid previously granted to TUI under other aid categories of the Temporary Framework were insufficient, which is indeed the case when recapitalisation aid is warranted according to the Temporary Framework (i.e. when liquidity aid is insufficient and, as a result of the protracted demand shock and dropped revenues, equity is needed to make sure companies viable before the crisis are not forced to exit the market due to the pandemic)136. The SA.56943137 case is an example of aid used in an industry with strong ties to tourism as it involved the recapitalisation of an airline, airBaltic. The beneficiary is an airline in majority state ownership by Latvia, and was not in difficulty at the end of 2019 (it even budgeted a modest net profit for 2020 before the outbreak), but it had to cancel tens of thousands of flights in 2020. According to the Commission’s decision, without the equity injection of the state, airBaltic would become insolvent because of its projected 2020 losses (200-300 million euros) and a pre-pandemic bond issue that airBaltic would default on if it could not maintain a certain cash balance. In the decision, the Commission accepted that all the conditions of recapitalisation aid mentioned above were met (aid was kept at the minimum level necessary, the pricing had been set in accordance with the Temporary Framework, airBaltic is a systemically important company, there was no alternative of aid etc.), and authorised an aid package of 250 million euros of capital increase. The amount of aid was actually reduced from 286 million euros to the authorised level because the Commission questioned the proportionality and necessity of the higher amount. 135 The decision authorising the aid was issued on 4 January 2021, available in https://ec.europa.eu/commission/presscorner/detail/en/IP_21_7 (accessed on 5 March 2021). 136 Point 44 of the Temporary Framework and points 4-5 of the second amendment. 137 Commission decision C(2020) 4665 final of 3 July 2020 (SA.56943 (2020/N) – COVID-19: Recapitalisation of airBaltic).
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