Covington Helps Riga Airport Secure EC Recapitalization Approval

Covington Helps Riga Airport Secure EC Recapitalization Approval

March 12, 2021

BRUSSELS—Covington represented Riga International Airport and the Latvian State in obtaining State aid approval for the recapitalization of Riga International Airport. On March 8, 2021, the European Commission (EC) approved the state recapitalization of up to €39.7 million, comprising a capital injection and a waived dividend payment for the 2019 financial year.

The measure was notified to the EC under the EU’s Temporary Framework for State aid to support the economy in the current COVID-19 pandemic. Riga International Airport experienced substantial loss of revenue due to the travel restrictions implemented by Latvia and other countries to limit the spread of the virus. These measures, in conjunction with the severe reduction in travel demand, have deteriorated the financial situation of the company, while the pace of traffic recovery for Riga International Airport is expected to be slower than other European airports, due to an almost non-existent domestic market.

The recapitalization aid approved by the EC will preserve the viability of Riga International Airport and ensure Latvia’s connectivity to the rest of Europe and third countries. Executive Vice-President Margrethe Vestager, in charge of competition policy, acknowledged that “[a]irports are among the companies that have been hit particularly hard by the coronavirus outbreak. With this measure, Latvia will contribute up to €39.7 million to reinforce Riga International Airport's equity and [help] the company face the economic effects of the outbreak.”

The Covington team was led by co-chair of the firm’s global competition practice Johan Ysewyn and senior advisor Sophie Bertin.