State aid: European Commission approves €11.7 million Croatian grant to compensate Croatia Airlines for damage caused by coronavirus outbreak

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The European Commission has found a Croatian grant of €11.7 million (approximately HRK 88.5 million) to the state-owned airline Croatia Airlines to be in line with EU State aid rules. The measure aims at compensating the airline for the losses directly caused by the coronavirus outbreak and the travel restrictions introduced by Croatia and other destination countries to limit the spread of the coronavirus in the period between 19 March 2020 and 30 June 2020. This has forced Croatia Airlines to cancel most of its scheduled flights, and resulted in major losses in turnover.

The public support will take the form of a direct grant. 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 the damages directly caused by exceptional occurrences, such as the coronavirus outbreak.

The Commission found in particular that the Croatian measure will compensate damage that is directly linked to the coronavirus outbreak.

An independent external audit firm will verify that the aid does not exceed the amount of damage suffered during the period between 19 March 2020 and 30 June 2020. Following the audit, any public support received by Croatia Airlines in excess of the actual damage suffered will have to be returned to Croatia. The risk of overcompensation is therefore excluded.

The Commission also found that the measure is proportionate as the compensation does not exceed what is necessary to make good the damage. On this basis, the Commission concluded that the Croatian measure is in line with EU State aid rules.

More information will be available on the Commission’s competition website, in the public case register under the case number SA.55373 once confidentiality issues have been resolved.

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