European Union judges Alitalia loans “illegal”, authorizes new carrier

BRUSSELS (AFP) – European Union (EU) antitrust authorities yesterday ruled Italy’s € 900m loans to ailing airline Alitalia ‘illegal’, but cleared the new carrier country to obtain government funding and avoid repaying the money.

“Following our in-depth investigation, we came to the conclusion that two public loans worth 900 million euros granted by Italy to Alitalia gave the company an unfair advantage over its competitors, in violation of EU state aid rules, ”said Margrethe Vestager, EU Head of Competition. A declaration.

“They must now be picked up by Italy from Alitalia to help restore a level playing field in the European aviation industry.”

But authorities in Brussels simultaneously said that the new national airline ITA – which is due to start flying next month – was not required to repay the money and that € 1.35 billion injected into the company by Rome was not breaking state aid rules.

“Italy has demonstrated that there is a clean break between Alitalia and the new airline ITA, and that its investment in ITA is on terms that a private investor would have accepted,” Vestager said.

A Boeing 777 in the Alitalia colors at Rome’s Fiumicino international airport. PHOTO: AFP

“Once ITA takes off, it is up to Italy and ITA management to seize this opportunity once and for all. And we will continue to do our part to ensure fair competition in the European aviation sector. “

The loss-making company Alitalia went into public administration in 2017, but Italy struggled to find an investor to take it over. The situation has only been exacerbated by the coronavirus pandemic which has brought airlines around the world to the ground.

The Italian government granted the company two loans worth 600 million euros and 300 million euros in 2017, as Alitalia sought liquidity without access to the debt market.

Earlier this year, Italy said it had reached a deal with the EU for a bailout that creates a new debt-free company to take over some of Alitalia – ITA’s assets.

ITA’s board of directors last month approved a firm bid for 52 of Alitalia’s aircraft, related airport slots and other assets.

The Italian government has created a fund of 100 million euros to reimburse Alitalia customers.

Italy granted state loans to Alitalia for a total amount of 1.3 billion euros between 2017 and 2019.

In July, he approved an additional 700 million euros for the ITA.

Further sums are expected in 2022 and 2023, bringing the total to 1.35 billion euros.

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