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EU: Estonian Air ceases operations after EU orders State Aid returned

 |  November 8, 2015

Estonian Air therefore needs to pay back the state aid already received, which according to the Commission’s information amounts to about €85 million plus interest, and cannot receive an additional €40 million of restructuring aid. Estonian Air has been consistently loss-making since 2006.

The Commission’s investigation has shown that the aid measures cannot be approved under EU state aid rules, because they involve repeated public support that did not enable the company to become viable again and did not limit the distortions of competition created by the aid.

Commissioner Margrethe Vestager, in charge of competition policy, said: “Companies should compete based on a sustainable business model rather than relying on continued support by the State to stay in the market. Estonian Air has repeatedly received public subsidies over the past five years but did not carry out the necessary restructuring to become viable as a business. It would not be a good use of taxpayer money to keep Estonian Air in the market artificially – nor would it be fair to competitors, which have to compete without such support.“

Estonian Air has been in financial difficulties for many years. It has repeatedly benefitted from public support measures during that period. Some of these measures did not involve state aid but a large majority of them provided Estonian Air with an unfair selective advantage over its competitors that cannot be justified under EU state aid rules.

Full content: The Wall Street Journal

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