This week, the European Commission declared illegal the €400 million in state aid that Alitalia received in 2019. Italy‘s government will now have to recover the €400 million, plus interest, from Alitalia. The Commission has concluded that the aid was not in line with EU competition rules, and that the company was granted an unfair advantage over its competitors on domestic and European routes.
The Italian authorities granted several loans to Alitalia between 2017 and 2019 so that it could continue operating despite its bankruptcy situation; first for €900 million, then for €400 million. None of these loans have so far been repaid.
In September 2021, the Commission declared the first two loans totaling 900 million euros illegal, considering that they were illegal public aid that gave the company “an undue advantage over its competitors, in violation of EU rules on State aid”, as reported at the time by the Vice-President responsible for Competition, Margrethe Vestager.
The Commission has again concluded that Italy did not act as a private operator when granting the 400 million loan because it did not assess the likelihood of recovering the borrowed money and interest. It instead focused on securing the domestic and international routes operated by Alitalia at the time.
The Italian authorities did not consider it illegal to offer this new injection despite the fact that the rules for the rescue and restructuring of companies did not allow new subsidies to be granted after the two loans in 2017. According to the Commission, no private investor would have granted this loan to the company so Rome’s support represented an “unfair” financial advantage compared to other competitors serving the same air routes at national, European and global level.
The ruling does not affect the company that resulted from the extinction of Alitalia, Ita Airways. The Minister of Economy, Giancarlo Giorgetti, has assured that the good management of the end of Alitalia and the birth of the aforementioned Ita Airways has been demonstrated. “The exclusion of Ita from the requests for repayment of the bridging loan to Alitalia proves that we are right and we will continue along this path,” Giorgetti told Italian media.
Alitalia went into insolvency proceedings in May 2017, but continued to operate thanks to the support provided by the Executive. It was in 2018 that the EC opened a formal investigation to establish whether the two 2017 loans (900 million) followed EU rules on state aid. Already in February 2020 Brussels opened a second investigation on the 400 million euros granted in October 2019.
In September 2021, the EC already found that Ita Airways, which had acquired some of Alitalia’s assets in 2021, is not the economic successor of Alitalia and is therefore “not obliged to reimburse the illegal state aid received by Alitalia”. The Government is currently negotiating the sale of Ita Airways, whose sole shareholder is the Ministry of Economy and Finance.
