European Commission approves €1.7 billion German measure to recapitalise Flughafen Berlin Brandenburg in the context of the coronavirus pandemic

The European Commission has approved German plans to grant up to €1.7 billion for the recapitalisation of Flughafen Berlin Brandenburg Gmbh (‘FBB’). The measure was approved under the State aid Temporary Framework.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Airports have been hit particularly hard by the coronavirus outbreak and the travel restrictions in place. With this measure, Germany will contribute to reinforcing Flughafen Berlin Brandenburg’s equity position and help the company face the economic effects of the outbreak. At the same time, the public support will come with strings attached to limit undue distortions of competition. We continue working in close cooperation with Member States to ensure that national support measures can be put in place as quickly and effectively as possible, in line with EU rules.”

The German recapitalisation measure

FBB is the state-owned airport operator in Berlin, Germany. It manages the Berlin Brandenburg airport (‘BER’).

Due to the coronavirus outbreak and the travel restrictions that Germany and other countries had to impose to limit the spread of the virus, FBB suffered substantial losses while still facing significant operational costs. As a result, the equity and liquidity position of the company deteriorated.

In this context, Germany notified to the Commission, under the Temporary Framework, its plans to grant up to €1.7 billion for the recapitalisation of FBB by allowing its public shareholders, the Länder Berlin and Brandenburg and the Federal Republic of Germany, to inject the capital into FBB’s capital reserve.

FBB will use part of the aid to repay the subsidized interest loans granted under a previous scheme that the Commission approved in August 2020 (SA.57644).

The Commission found that the recapitalisation measure notified by Germany is in line with the conditions set out in the Temporary Framework. In particular:

• Conditions on the necessity, appropriateness and size of the intervention: the capital injection will not exceed the minimum needed to ensure the viability of FBB and will not go beyond restoring its capital position compared to before the coronavirus outbreak;
• Conditions on the State’s entry: the recapitalisation aid will prevent an insolvency of FBB, which would have serious consequences for Berlin’s connectivity and employment;
• Conditions regarding the exit: Germany committed to work out a credible exit strategy within 12 months after the aid is granted, unless the State’s intervention is reduced below the level of 25% of equity by then. Should the State’s intervention not be reduced below 15% of FBB’s equity after seven years from the recapitalisation, Germany will have to notify a restructuring plan for FBB to the Commission.
• Conditions regarding governance and acquisition ban: until at least 75% of the recapitalisation is redeemed, FBB (i) will be subject to strict limitations as regards the remuneration of its management, including a ban on bonus payments; and (ii) will be prevented from acquiring a stake of more than 10% in competitors or other operators in the same line of business;
• Commitments to preserve effective competition: until the aid has been fully redeemed, FBB will not offer any discounts to airlines and not expand its capacity. This is to ensure that FBB does not unduly benefit from the recapitalisation aid by the State to the detriment of fair competition in the Single Market; and
• Public transparency and reporting: FBB will have to publish information on the use of the aid received and on how it supports activities in line with EU and national obligations linked to the green and digital transition.

The Commission concluded that the recapitalisation measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework. The measure aims at restoring the financial position and liquidity of FBB in the exceptional situation caused by the coronavirus pandemic, while maintaining the necessary safeguards to limit competition distortions.

On this basis, the Commission approved the measures under EU State aid rules.