Blue Air's desperate message to the Romanian Government
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Blue Air is going through a difficult time. The crisis generated by the COVID-19 pandemic has greatly affected Romania's low-cost airline. In order to get over this hop, Blue Air needs a loan, a support from the authorities. In a normal period, this impasse would certainly not have been reached. But we live in troubled and uncertain times.
The Romanian government has promised conditional state aid, only it has been waiting for 3 months and it is not yet known exactly when the money will be transferred to Blue Air. In this context, Blue Ait sends a message of despair to the Romanian Government through the General Manager, Oana Petrescu.
Blue Air's desperate message
Oana Petrescu, Blue Air: „We ask the Romanian Government to allow the continuity of Blue Air's activity by approving in due time the Normative Act necessary for issuing the state guarantee. The state guarantee is an essential condition for covering, through a bank loan, the losses generated by the force majeure situation created by the COVID-19 pandemic and for the success of Blue Air's recovery plan under conditions of preventive agreement. "
The Blue Air team has built the largest in the last 15 years privately owned company in the Romanian aviation industry, a solid company, respected by its partners, which serves over 4 million passengers per year and represents the main air carrier of small entrepreneurship and the Romanian diaspora.
For the past four years, Blue Air paid to the Romanian state taxes, fees and contributions to the Romanian state that exceeded 500 million lei and became a critical company for Romanian aviation.
After three years of massive investments in routes and slots at major European airports, the company became profitable last year, its shares being valued, in December 2019 at 1,6 billion lei (over 350 million euros).
Blue Air was forced to suspend scheduled flights from March 20 to July 30, 2020
In the current situation, given the limitations of the state of emergency imposed by the authorities, Blue Air was forced to suspend scheduled flights from March 20 to July 30, 2020 and significantly reduce its level of operation for the whole year 2020.
Faced with this situation of force majeure, in order to cover the losses created and to continue the activity, on March 13, 2020 Blue Air formally requested support from the Romanian state.
Six weeks later, after all inter-ministerial procedures have been completed and the European Commission has been pre-notified, The Government approved, through the Memorandum adopted at the meeting of April 23, 2020, the granting of a loan of 300 million Ron to Blue Air in order to cover the direct losses generated by the force majeure situation generated by the Covid-19 pandemic. In this process, Blue Air has demonstrated that it has the capacity to resume operations on a profitable basis and to repay this loan in a maximum of 6 years, in accordance with the Temporary Framework established by the Commission for this purpose.
In April, the Interministerial Committee on Finance, Guarantees and State Insurance approved the granting by Eximbank of a bridge loan of 30 million Ron for Blue Air
In addition, in order to avoid the closure of the business during the state of emergency, on April 29, 2020, the Interministerial Committee for Finance, State Guarantees and Insurance approved the granting by Eximbank of a bridge loan of RON 30 million for Blue Air for the payment of the carbon certificates necessary to fulfill the compliance obligation deriving from the European conditionalities, with a source of reimbursement from the credit granted by the state.
During this time, although permanently over 90% of employees were technically unemployed, the Blue Air team mobilized and continued to do its job. - the operational team promptly responded to all requests from the Romanian state to organize repatriation flights, the financial team made sure to save every penny and provided the support of each supplier to gain essential time to survive until the resumption of activity, the technical team remodeled the aircraft needed for transport of masks, sanitary equipment and food, and the pilots flew everywhere where needed - to traditional destinations in Europe, but also on new routes in Italy (Venice), France (Marseille), Serbia (Belgrade), the Netherlands (Amsterdam) , China (Shanghai, Tianjin, Shenzhen), Kuwait, Emirate (Dubai), Iraq (Erbil).
Blue Air submitted the request to open the preventive composition procedure
In addition, in order to ensure the resumption of regular flights in good condition from 1 July to 29 June Blue Air submitted to the Bucharest Municipal Court the request to open the preventive composition procedure - application admitted by the judge on July 6, 2020. This approach ensure the protection of the company and the fulfillment of all obligations assumed to its passengers, employees and partners, and gives them and the Romanian state additional comfort regarding the ability of Blue Air to continue its activity in profitable conditions. According to the legal terms, Blue Air has the obligation to submit the Concordat Offer within a maximum of 30 days.
The Romanian state has reconfirmed the commitment to grant a loan worth 300 million lei
Meanwhile, talks with representatives of the Ministry of Transport and the Romanian authorities and aviation industry advanced, and during the high-level meeting with the Prime Minister of Romania Ludovic Orban, the Minister of Public Finance Florin Citu and the Minister of Transport Lucian Bode on Monday, July 27, at Victoria Palace, they have reconfirmed the commitment of the Romanian state to support Blue Air - through the guarantee by the state of a bank loan of 300 million Ron, repayable in 6 years, intended exclusively to cover the losses generated by the decisions of the Romanian and European authorities to limit free movement and air transport, according to the provisions of the Temporary Framework.
We specify the fact that through this solution the impact on Romania's budget is strictly positive, as the financing will be provided by the banking system and the Romanian state does not have to choose between borrowing Blue Air and increasing allowances or pensions, as it was circulated.
On the contrary, through this measure the Romanian state ensures that Blue Air will continue to operate and connect the Romanian regions, among themselves and with Europe, to support Romanian aviation, to transport the over 4 million Romanian entrepreneurs and citizens working abroad - and the related taxes, which in 2020 are already 58 million lei, and which will continue to increase with the exit from the crisis, will continue to be paid in Romania.
Blue Air wants to fly.
We know what we have to do, and we have shown so far that we can do what we set out to do.
We have the ability to repay the bank loan and related interest, as demonstrated by both the representatives of the European Commission and Eximbank and the concordat administrator, KPMG.
On March 13, 2020, we submitted to the Government our formal request to be supported during this period of force majeure - when, for the first time in the history of international aviation, the entire world fleet stopped flying.
Blue Air calls on the Romanian Government to accelerate the process of adopting the normative act necessary for contracting the loan
Today, 31 July 2020, 20 weeks after our formal request, we ask the Romanian Government to accelerate the process of adopting the normative act necessary for the continuation of the concordat procedure and the contracting of the bank loan.
Otherwise, our passengers, small business and the Romanian diaspora, will travel with other low cost airlines - which will not contribute to Romania's state budget and will not take into account in deciding the interests of Romania and its citizens.
We will sadly witness the wastage of the efforts of a generation of Romanians who love to fly and aircraft, the disappearance of a reputable Romanian company, which competes on an equal footing with the major European airlines.
You will lose thousands of highly skilled jobs, both directly to Blue Air and to our value-added companies, airports, ground operators. You will witness the loss of the multiplier effect in the economy created by the existence of a local transport operator with significant market share.
At Blue Air, we believe that both Romanians in the country and the millions of Romanians living and working in other European countries deserve to be connected to Europe and Romania in a comfortable way and at competitive prices.
The existence of solid Romanian companies in the strategic fields for the country represents the only guarantee for the protection of the Romanian strategic interests. Blue Air is, and may remain, one of these companies. You can count on us.
Please don't miss everything the Blue Air team and passengers have built in the last 15 years!
Thanks in advance,
Oana Petrescu, general manager
On behalf of the entire Blue Air team