The Commission Considers Aid to Alitalia Illegal

The European Commission ruled on Friday that two Italian loans to the airline Alitalia, for a total of 900 million euros, constituted illegal state aid, while ruling in a related file that ITA, the “successor” of ‘Alitalia, is sufficiently distinct from it and will therefore not have to reimburse the disputed aid from which its older sister received.

The two loans deemed anti-competitive by the Commission were granted by Italy in May and then in October 2017, when the airline Alitalia was in dire need of liquidity. Since then, his situation has not recovered and the Italian company will cease all its flights in October. Part of its activities will be taken over by ITA, a new entity owned by the Italian public authority.

Rome had prepared its case well, negotiating the various aspects of this “relaunch” with the Commission. The latter thus confirmed on Friday that ITA is sufficiently different from Alitalia: there is “economic discontinuity”, and the big sister’s debt will therefore not be transferred to the new entity.

It should be noted that the European Commission continues to look into another loan granted to Alitalia, dating from 2019. Regarding the loans of 2017, “it was unlikely that the airline would be able to generate enough liquidity to repay the loans. state loans before their maturity or that it can sell its assets to raise enough liquidity to repay the debt “, observes the Commission. By granting this aid, Italy therefore did not act as a private actor would have done, which constitutes State aid. However, the latter did not comply with the European framework for rescue and restructuring aid, so there was a distortion of competition, according to the Commission. Theoretically, Alitalia should reimburse the 900 million in addition to the interest. The company had requested in 2017 to be placed under the extraordinary administration regime provided for by the Italian bankruptcy law, after the refusal of a restructuring by the employees.

In the case of an insolvent company, “the elimination of the distortion of competition can be obtained by entering the claims related to the illegal aid in the tables of commitments of the current insolvency proceedings under the extraordinary administration “, commented Friday noon in the press room a spokesperson for the Commission, Arianna Podesta. In this case, “the 900 million will be reimbursed within the limits of the sale of the remaining assets, therefore within the limits of Alitalia’s capacities,” she notes. If we do not arrive at the full reimbursement, “Alitalia must cease all its activities and leave the market” to definitively eliminate the alleged distortion of competition.

ITA, for “Italia Trasporto Aereo”, can calmly consider the launch of its activities. At the same time, the European Commission ruled on Friday that there was no question of illegal state aid in the 1.35 billion euros that Italy plans to inject into the capital of the new company.

“Italy has demonstrated that there is a clear separation between Alitalia and the new airline ITA and that this investment in ITA complies with the conditions that a private investor would have accepted”, commented the Commissioner for Competition Margrethe Vestager on Friday. .

ITA could recover the Alitalia brand, because it has yet to be sold after an open call for tenders, for which ITA could be a candidate. On the other hand, the new company is excluded from the call for tenders to take over Alitalia’s “MilleMiglia” loyalty program, to avoid direct transfers of customers.

Reviewer overview

The The Commission Considers Aid to Alitalia Illegal Considers Aid to Alitalia Illegal - /10

Summary

The European Commission ruled on Friday that two Italian loans to the airline Alitalia, for a total of 900 million euros, constituted illegal state aid, while ruling in a related file that ITA, the "successor" of 'Alitalia, is sufficiently distinct from it and will therefore not have to reimburse the disputed aid from which its older sister received.

0 Bad!