Updated on Friday, 10 September 2021 – 13:53
The European Commission has demanded that Rome demanded that it recover the loan plus the interests of the company
Alitalia planes at Fumicino airportREMO CASILLIREUTERS
“It gave the company an unfair advantage over its competitors, in violation of the EU state aid rules,” the EC Vice President and Head of Competition declared in a statement. Margrethe vestager. Thus the European Commission (EC) declared this Friday illegal aid two loans of 900 million euros that Italy granted to the airline Alitalia in 2017 and demanded that Rome recover the money, plus interest, from the company. “
Italy must now recover the sum “to restore a level playing field within the European aviation industry.” But the Commission, as the Executive explained in a second decision, will not claim the money from the new company Italy Transporto Aereo (ITA) considering that it is not its successor because there is an “economic discontinuity”. Alitalia, with a deficit since 2008, urgently needed a financial injection at the beginning of 2017 to continue its activities and obtained this assistance through two state loans in May and October of that year for 600 and 300 million euros, respectively.
In parallel, the Commission recalled, Alitalia was placed under extraordinary administration, provided for by Italian law for bankruptcies. A year later, in April 2018 and after receiving different complaints from other airlines that understood that this aid affected fair competition, the Community Executive opened a formal investigation into the transaction to determine if it constituted illegal aid. Under EU competition rules, public authorities can intervene in favor of companies without incurring illegal state aid, but provided that they behave as a private investor would in a market economy. On the other hand, when granting the aforementioned loans to the airline, the “Italian State did not act as a private investor would have done because it did not assess the probability in advance of repayment of the loans and their interest”, the Commission stated.
Brussels also believes that it was “unlikely” that Alitalia could “generate sufficient liquidity to repay government loans before maturity or that it could sell assets” to obtain cash with which to pay the debt. “On the basis of these elements, the Commission has reached the conclusion that no private investor would have granted the loans to the company at that time and that they constituted State aid within the meaning of the EU rules in this area,” he said. the Commission.
The Community Executive understands that the injection of liquidity could not have been authorized as “rescue aid” based on EU guidelines, according to the information notified by Italy because neither the loans were repaid in six months nor Rome never presented a restructuring plan for the company to become viable again, nor was the company liquidated. All this leads Brussels to conclude that Italy granted Alitalia “an unfair economic advantage over its competitors on national, European and world routes, which constituted state aid incompatible with the internal market,” according to ..
ITA IS NOT ALITALIA
In a second decision, the Commission’s Competition services concluded that the new company Italy Transporto Aereo (ITA), created in 2020, is not the economic successor of Alitalia and that the capital injections of 1,350 million euros from the Italian State in the company they do not suppose an illegal aid. “Italy has shown that there is a clear separation between Alitalia and the new airline ITA and that this investment in ITA was in accordance with the conditions that a private investor would have accepted,” Vestager said in this regard. The Commission understands that there is “economic discontinuity” between the two companies, despite the fact that ITA takes over some of Alitalia’s assets and rights, so the new company is not obliged to repay the 900 million euros of illegal aid by Alitalia. ITA operate a fleet of aircraft less than half the size of Alitalia and focus on profitable routes, in addition to using only Alitalia’s take-off and landing strips (“slots”) consistent with its flights. Furthermore, ITA will not take on much of the cost. Alitalia’s maintenance activities, which will be sold through tenders, or adopting the Alitalia brand, although it may choose to acquire it under market conditions, and it does not sell its tickets directly to its customers without going through Alitalia, among other aspects.
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