State aid: EU Commission approves Swedish public guarantee of up to €137 million to compensate airline SAS for damage caused by coronavirus outbreak

The European Commission has found a Swedish State guarantee of up to approximately €137 million on a revolving credit facility in favour of Scandinavian airline SAS to be in line with EU State aid rules. The measure aims at partly compensating the airline for the damage suffered due to the coronavirus outbreak.

Since the start of the coronavirus outbreak, SAS has suffered a significant reduction of its services, resulting in high operating losses. On 11 April 2020 the Commission approved a State guarantee scheme for airlines notified by Sweden. However, the significant drop in travel demand in relation to the coronavirus outbreak and to the emergency measures necessary to limit its spread continues deteriorating the airlines’ financial situation.

Sweden notified to the Commission an aid measure to partly compensate SAS for the damage suffered due to the cancellation or re-scheduling of its flights as a result of the imposition of travel restrictions linked to the coronavirus. The support will take the form of a State guarantee on a revolving credit facility in favour of SAS. Sweden will guarantee up to approximately€137 million of such revolving credit facility.

If SAS will ultimately not be eligible to receive a State guarantee for the loan under the already approved guarantee scheme for airlines, it will receive it under the present individual aid measure. The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures granted by Member States to compensate specific companies or specific sectors (in the form of schemes) for damage directly caused by exceptional occurrences.

The Commission found that the measure is proportionate, as the foreseen compensation does not exceed what is necessary to make good the damage. The Commission therefore concluded that the scheme is in line with EU State aid rules. Executive Vice-

President Margrethe Vestager, in charge of competition policy, said: ”The aviation sector has been hit particularly hard by the coronavirus outbreak. The measure approved will enable Sweden to compensate SAS for part of the damage suffered due to the coronavirus outbreak through a public guarantee of up to €137 million.

Putting in place the necessary support measures in a timely, coordinated and effective way, in line with EU rules, is of paramount importance in these challenging times.”

Arianna Podesta –