Brussels: Europe and the Arabs
The European Commission in Brussels, in accordance with EU rules on state aid, approved France's plan to first pay restructuring aid of €119.3 million to enable Air Austral to return to life; And secondly, 17.5 million euros in aid to compensate the company for the damage it suffered between March 17 and June 30, 2020 due to the Corona outbreak, according to a statement by the Commission.
Air Austral was founded in October 1990 from Reunion, a French airline that ensures territorial continuity between Reunion and other neighboring islands in the Indian Ocean. With a fleet of eight aircraft, it also operates services to destinations in the countries of the Southwest Indian Ocean and Asia.

restructuring aid
Following the approval of the French Rescue Committee in the form of a €20m state loan for Air Austral on January 18, 2022, France has officially notified the Commission of restructuring aid amounting to €119.3m aimed at financing the airline restructuring plan.
The Commission today approved restructuring assistance for Air Austral together with a restructuring plan in accordance with Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU) and the Guidelines on State Assistance for Bailout and Restructuring of Firms with Financial Bonds.
According to the commission, the plan makes it possible to ensure the long-term survival of the airline and thus prevent it from collapsing, which could cause great harm to Reunion as an overseas territory. Moreover, the public financing of the restructuring plan is in accordance with the principle of proportionality, as the beneficiary contributes to its financing through its own financial sources, which makes it possible for the airline to return to long-term viability and affects trade between member states on a very limited scale.
The Commission took into account, in particular, measures aimed at reducing distortions in the competition, namely: (i) limiting the number of seats offered by Air Austral; (ii) a limitation on the number of routes operated by the airline; (3) the prohibition of taking stakes in other enterprises; and (iv) entering into business agreements with other airlines that so request. These measures will continue to apply for the duration of the restructuring plan, which will run from January 2022 to March 2025.
compensation
France has notified the Commission of procuring €17.5 million in aid to compensate Air Austral for damages incurred between 17 March and 30 June 2020 as a direct result of the travel restrictions applied to limit the spread of the coronavirus. Due to these travel restrictions, the airline incurred significant operating losses and experienced a sharp decline in traffic and profitability during this period.
The Commission assessed the procedure under Article 107 (2) (b) TFEU, which enables the Commission to approve state aid measures granted by Member States to compensate certain companies or sectors for damage caused directly by extraordinary events, such as the coronavirus outbreak.
In particular, the Commission found that the French measure would address damage directly related to the coronavirus outbreak. I have also found that the measure is proportionate, in that the compensation does not exceed what is necessary to repair the damage.
On this basis, the Commission concluded that the French measure was in line with EU state aid rules.
The EU's state aid rules, more specifically Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU) and the Commission's Guidelines on State Aid for Bailout and Restructuring of Non-Financial Undertakings in Difficulty, enable Member States to support companies in difficulty difficulty, under certain strict conditions. In particular, rescue aid can be granted for up to six months. After this period, bailout aid must either be compensated or Member States must notify the Commission of the restructuring plan, for evaluation under the rules of state aid. In order for the aid restructuring to be approved, the plan must ensure that the long-term viability of the company can be restored without continued government support, that the company contributes adequately to the costs of the restructuring and that distortions in competition created by the aid are addressed through compensatory measures, including So, in particular, structural measures.
State aid rules based on Article 107(2)(b) TFEU enables member states to compensate specific companies or sectors (in the form of schemes) for damages caused by extraordinary and directly caused events, such as those caused by the coronavirus outbreak.