Romanian Government Approved the Plan that Saves TAROM

The government approved the plan to save TAROM, the state-owned Romania Air Company.

Romania’s Minister of Transport, Sorin Grindeanu, announces that state aid worth 471.04 million lei (approx EUR 94.4) for TAROM has been approved. Through this aid, TAROM will undergo an extensive transformation and could return to profit as early as 2024. For the last decade, TAROM has been a loss-making company.

This aid, worth 471.04 million lei, is granted based on a decision issued by the European Commission on April 29, 2024.

The allocated amount has the following destinations:

• up to 214.3 million lei represents restructuring aid that is proposed to be granted in the form of capitalization in 2024;
• 12.51 million lei represents the share capital increase carried out in 2023;

TAROM will use the 214.3 million lei (for working capital) to cover the liquidity deficit and the financial balancing of the company in 2024. These operations will create the context of the company’s profitability and its transition to profit as early as 2024.

The European Commission approved, at the end of April, under EU state aid rules, Romania’s plans to grant the state-owned national air carrier, TAROM, restructuring aid worth up to 95.3 million euros (473.69 million lei). The measure will allow the company to restore its long-term viability while minimizing distortions of competition.

On May 28, 2021, Romania notified the Commission of a plan to restructure the company Tarom. The restructuring plan sets out measures to streamline Tarom’s operations, renew its aging fleet and cut costs.

The restructuring measures include the following: cancellation of debt of approximately EUR 49.53 million (246.19 million lei) corresponding to the value of the rescue aid, approved by the Commission in February 2020, plus related interest; and a capital injection of approximately 45.77 million euros (227.50 million lei).