The European Commission has ruled that €900 million injected by the Italian government into the failed airline Alitalia in 2017 amounted to illegal aid.
It also ruled, however, that ITA, a new airline subsequently set up by the Italian government, was not the ‘economic successor’ to Alitalia, and was not liable to repay the illegal aid.
The payments under investigation – after complaints by rival airlines – were provided in 2017 to keep Alitalia operating, as it was placed into special bankruptcy proceedings under Italian bankruptcy law.
Separate probe
Under EU rules, public investments in companies are allowed when they are judged to be made on terms that a private operator would have accepted.
“Italy did not act like a private investor would have done, as it did not assess in advance the probability of repayment of the loans, plus interest,” the commission said, adding that no private investor would have granted the loans to the company at the time.
A separate investigation into a later €400 million loan provided to Alitalia in 2019 is continuing. Italy must now recoup the €900 million from Alitalia.
ITA injections backed
The commission approved, however, Italy's plans for capital injections of €1.35 billion into ITA, saying that they did not amount to State aid under EU rules.
ITA is set to take over some of Alitalia’s assets and rights, but the commission said that EU rules meant that a new company acquiring the assets of another company was not liable for past aid received by the seller, if the two companies were sufficiently different from one another.
The EU body found that ITA would be taking over only a limited number of Alitalia’s slots, while it would not be acquiring significant parts of Alitalia’s non-aviation businesses.
Commissioner Margrethe Vestager said that the decisions it had made were important to help restore a level playing-field in the European aviation sector, while also ensuring air connectivity in Italy and protecting consumer rights.
“Once ITA takes off, it is for Italy and the management of ITA to make use of this opportunity, once and for all,” she added.