The European Commission (EC) has found that a Danish public guarantee of up to 137 million euros on a revolving credit facility in favour of the Scandinavian airline SAS is in line with the State Aid Rules of the European Union (EU). With this measure, Denmark tries to partly compensate the airline for the damage it has suffered due to the outbreak of the novel coronavirus, because of the cancellation or re-scheduling of its flights resulting from the imposition of travel restrictions introduced by the country to limit the spread of the coronavirus.

SAS (Scandinavian Airlines System) is a major network airline that is operating in Denmark, Sweden and Norway. Due to the outbreak of COVID-19, the airline has suffered a significant reduction of its services that resulted in high operating losses, as they usually provide of two-thirds of intra-Scandinavian air connectivity, but had to pause most of their operations due to the pandemic, as so many other airlines had to do on a world-wide level. 

As the aviation sector has been hit particularly hard by the COVID-19 pandemic, many countries aim to compensate airlines for the damages suffered due to the outbreak of the virus. Margrethe Vestager, Executive Vice-President of the EC, who is in charge of competition policy, states, that they “are working closely with Member States to find workable solutions to support companies in these difficult times, in line with EU rules.” 

As the EC considers the outbreak of the coronavirus to qualify as an exceptional occurrence with a significant economic impact, exceptional interventions by the Member States are justified to compensate for the damage linked to it. 

The EC assessed the measure Denmark requested for the compensation of SAS 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 damage directly caused by exceptional occurrences, and found it to be proportionate, as the foreseen compensation does not exceed what is necessary to make good the damage.