On 15 August 2017, Germany notified the European Commission of its intention to grant a 150 million euro bridging loan to Air Berlin, which will be provided by the German public credit institution KfW.
The purpose of the loan is to allow Air Berlin to continue operations and maintain its services while it concludes ongoing negotiations to sell its assets. At the end of the process, Air Berlin is expected to cease operating and exit the market.
In evaluating the aid granted, the Commission has taken account of the fact that:
- the loan will be paid out in instalments under stringent conditions. In particular, Air Berlin has to demonstrate its liquidity needs on a weekly basis and new instalments will only be paid when all existing liquidity has been used;
- Germany committed to ensure that either the loan will be fully repaid; otherwise it will submit a winding down plan for Air Berlin.
In the light of the strict conditions attached to the loan, its short duration and the fact that Air Berlin is expected to cease operations at the end of the process, on 4 September 2017 the Commission concluded that the measure is compatible with EU State Aid rules.
Rescue and restructuring aid are among the most distortive types of State Aid and, according to the Commission’s Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty, they can only be granted to companies once these have exhausted all other market options and provided that they are limited in time, scope and contribute to an objective of common interest.