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Transport Minister: Flag carrier TAROM set to go down unless restructuring plan is carried out now

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Lucian Bode

The restructuring plan for Romania's flag carrier TAROM is mandatory, and its implementation now is the last resort, the last chance to use "this window of opportunity" generated by the coronavirus crisis for "cleaning this company," Minister of Transport, Infrastructure and Communications Lucian Bode said on Tuesday evening for th private broadcaster Digi 24.

The Transport Minister specified that the legal procedures for accessing the aid intended for air carriers TAROM and Blue Air will be initiated in July or next week at the latest, so that the funds required for the two companies to overcome the coronavirus-generated crisis period are made available.

"We are talking about two companies - TAROM and Blue Air - one 97 percent state-owned, the other with a 99.99 percent private Romanian shareholdership. TAROM's turnover last year was 1.5 billion lei, Blue Air's turnover was 2.1 billion lei. Why am I mentioning these figures? They have duly paid taxes to the state. We are talking about TAROM, a company with 1,776 employees and 29 aircraft, and Blue Air - with 926 employees and 20 aircraft, so these are important companies. For example, Blue Air accounts for 25 percent of Romania's low-cost market. The market is the hardest thing to regain in the air transport industry. Once you have lost the market, it's almost impossible to win it back. That's why we, the government of Romania, have done and will do everything in our powers to save these companies," Bode said.

He mentioned that this February TAROM got the approval for a 37 million euro rescue aid, while Blue Air got a 30 million lei government loan to pay for its green certificates, without which it would have no longer been able to fly.

"Both Blue Air and TAROM have taken action during this period. For example, Blue Air put over 80 percent of its 926 employees on furlough and reduced the working time from 5 to 4 days. TAROM currently has more than 600 employees on furlough and has reduced the work schedule from 5 to 4 days, which means that pressure on the budgets has been lowered by 20 percent. The restructuring plan is mandatory, and from my point of view, in TAROM's case, if it is not carried out now, the company is set to go down. And I'm telling you: this is our last chance to use this window of opportunity generated by the crisis to clean this company," the Transport head warned.

The Minister stressed that TAROM's restructuring plan is not just about personnel cuts, but also about the renewal of the fleet, dropping unprofitable routes, as well as about reducing the number of agencies in Romania and abroad.

TAROM will also reduce its fuel costs because it will renegotiate its contract.

Asked what the danger would be if TAROM does not comply with the restructuring plan, Bode replied: "It would be a shame for Romania to join the three countries - as far as I remember there are three countries in Europe, Slovenia, Slovakia and Lithuania - which do not have national carriers. But we won't get there, because by applying the measures of the restructuring plan based on the four pillars I indicated here, we expect TAROM to be back in the black as of 2024."

TAROM currently has 13 ATR planes, four of which are new, received in the first three months of the current year; the four are part of a total of nine ATR 72-600 aircraft taken under operating lease for ten years. TAROM currently operates 29 aircraft on domestic and foreign routes.

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