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Alitalia: Brussels saves Italy but Italy is stuck

Alitalia: Brussels saves Italy but Italy is stuck

According to the European Commission, the 400 million euro state loan granted by Italy in 2019 to Alitalia is illegal and must be repaid but it is not required to do so through Ita. Facts, numbers and insights.

The European Commission has concluded that the €400 million state loan granted by Italy in 2019 to Alitalia is illegal under EU state aid rules. "Italy must therefore recover the illegitimate state aid, plus interest, from Alitalia", argues the Commission. But it is not required to do so by Ita, the new airline born from the ashes of Alitalia and controlled by the Ministry of the Economy, which is currently undergoing privatisation .

In May 2017, the Italian airline Alitalia was placed in special insolvency proceedings under Italian bankruptcy law, while continuing to operate as an airline. In order to keep Alitalia operational, in 2017 and 2019, Italy granted the company loans amounting to €900 million and €400 million, respectively. These loans have never been repaid.


In 2018, the Commission launched a formal investigation into whether two loans granted in 2017 (for a total of €900 million) complied with EU state aid rules. In February 2020, the Commission opened a formal investigation into whether the additional €400 million state loan granted by Italy on 26 October 2019 was in line with EU state aid rules. In September 2021, the Commission concluded that the €900 million state loans to Alitalia were illegal under EU state aid rules.


The Commission concluded today that, by granting the €400 million State aid loan in 2019, Italy did not behave as a private operator would have done, having not assessed in advance the likelihood of repayment of the loans, plus the interests, but aimed at guaranteeing the continuity of the service of Alitalia's national and international flights. Furthermore, the Commission considered that the aid could not be approved as rescue aid within the meaning of the Rescue and Restructuring Aid Guidelines.


In particular, Alitalia had already benefited from previous aid, namely the two loans granted in 2017. Therefore, the new loan allegedly infringed the one-off obligation under the R&R Guidelines. On this basis, the Commission concluded today that no private investor would have granted the loan to the company at the time and that the loan gave Alitalia an unfair economic advantage over its competitors on domestic, European and global routes, which constituted aid of incompatible state. Italy must now recover from Alitalia the illegal state aid of 400 million euros plus interest. The Commission already found in September 2021 that ITA Airways, which had acquired part of Alitalia's assets in 2021, is not Alitalia's economic successor and therefore is not required to repay the illegal state aid received from Alitalia.


But what happens now to the 400 million and the other 900 million already judged illegal plus interest? That money, Arianna Podestà, spokeswoman for the European Commission explained at a press conference, will have to be recovered by the Italian state as far as possible. «The extraordinary administration of Alitalia is still in progress – he recalls – with the aim of completing the liquidation of the company's assets. Italy has a duty to recover the aid incompatible with EU rules, plus interest, from Alitalia, to remove the market distortion" caused by the measure. "In the event of an insolvent company, the 400 million will be repaid by Alitalia within the limits of the revenues obtained from the sale of the company's assets and the value of any remaining assets that are not sold."


“Ita's exclusion from requests for repayment of the bridging loan to Alitalia is proof that we are right and will continue on this path. The conclusions of the EU Commissions were awaited and widely expected”. Thus the Minister of Economy, Giancarlo Giorgetti, on the conclusions of the European Commission.

This is a machine translation from Italian language of a post published on Start Magazine at the URL on Mon, 27 Mar 2023 13:41:57 +0000.