Rome will be informed that the US$900 million loan to Alitalia violates EU state aid rules

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EU State Aid Update

According to the judgment to be announced in Brussels, the Italian government provided Alitalia with a bailout loan of 900 million euros in 2017, which violated the EU’s state aid regulations.

Two people with direct knowledge of the matter said that the EU competition regulator’s decision will be announced on Thursday, although the time may be delayed. This was made after a three-year investigation was conducted. Provide bridge loan to Alitalia Illegal distortion of competition within the EU.

EU law prohibits member states from providing financial support to companies, giving them an advantage over competitors. The current Italian government, which was not in office when the loan was provided, declined to comment.

This decision opened the latest shameful chapter for Alitalia (Alitalia), the flag carrier of Italy that has been losing money for 75 years. The Roman government has partnered with Margrethe Vestager, the EU’s head of competition, to reach an agreement that allows the creation of a new airline independent of Alitalia.

Brussels will confirm the details of the new airline, Italia Transporto Aereo (ITA), which will start operations next month.

People with direct knowledge of the plan stated that ITA will be financially independent and will not be responsible for any illegal state aid received by Alitalia in recent years.

The people familiar with the matter added that as part of the agreement reached between Italy and Brussels, the new airline will be able to purchase part of Alitalia’s fleet and reduced landing time to allow the new company to operate. ITA will also be able to bid for trading rights in the name of Alitalia.

Alitalia has been facing financial difficulties for decades and has not announced its annual net profit since the millennium. During the Covid-19 pandemic, Rome completely controlled the airline, when the aviation industry was subject to strict travel restrictions to control the spread of the virus.

Other European governments Will also invest funds into national airlines During the epidemic. Ryanair CEO Michael O’Leary compared Lufthansa to a “crack cocaine addict.”

Brussels still needs a separate ruling 400 million euros in government loans Alitalia offered assistance to it when it tried to sell assets in 2019 to help it streamline operations. When it began its investigation last year, the committee raised “serious doubts” about whether the aid complies with state aid rules.

This year, Italian Prime Minister Mario Draghi joked that he thought Alitalia was “a commonplace meal and a bit expensive”, referring to its emotional connection with Italians and huge losses.

Draghi’s new coalition government has begun to implement an ambitious national reform plan to restart Italy’s stagnant domestic economy, including comprehensive reforms of the country’s legal system and bureaucracy.

He said that the new version of the airline must be “supported by its own wings without subsidies.”

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