COVID-19: European Commission approval of Danish state aid to SAS

Background

The aviation sector has been hit particularly hard by the COVID-19 outbreak. To limit the spread of the coronavirus, Denmark and other member states have introduced travel restrictions, which have resulted in re-scheduling or cancellation of several flights. The Danish state has therefore now initiated a state aid measure intended to compensate SAS for part of the damage suffered.

The aid measure

The aid takes the form of a state guarantee, the Danish state guaranteeing up to DKK 1 billion of a revolving credit facility.

The state aid measure has been devised such that the aid will not exceed the damage suffered. The damage suffered will be quantified on the basis of the airline's 2020 operating accounts, and the method used to quantify the damage will be subject to the Commission's prior approval. If it turns out that the state aid exceeds the damage actually suffered by SAS due to the COVID-19 outbreak, a claw-back mechanism will be activated, which means that SAS must return to Denmark any aid received in excess of the actual damage suffered.

The Commission's approval

The measure has been approved 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 for damage caused by "exceptional occurrences".

The Commission considers the COVID-19 outbreak to be an "exceptional occurrence", as it is an extraordinary, unforeseeable event having a significant economic impact. In the opinion of the Commission, the Danish measure does not exceed what is necessary to make good the damage, so the Commission has concluded that the scheme is in line with the state aid rules.

Read the European Commission's press release about the approval.