European Commission Says Nearly $1Bln State Aid To Alitalia Illegal, Demands Repayment

BRUSSELS (Pakistan Point News / Sputnik - 10th September, 2021) The European Commission declared illegal the state support in the amount of almost $1 billion allocated to the Italian state-owned airline Alitalia several years ago and decreed that the sum plus interest must be paid back.

"The European Commission has concluded that two State loans for an amount of 900 million, granted by Italy to Alitalia in 2017, are illegal under EU State aid rules. Italy must therefore recover the illegal State aid, plus interest, from Alitalia," the statement, released on Friday, said.

The state funding gave the company an unfair advantage over its competitors in violation of the EU rules, according to the commission. At the same time, the Italian government failed to assess the risks and prospects of loan repayment when making the decision, acting differently from a private investor, the EC noted.

Alitalia, which has been on the verge of bankruptcy since the 2008 financial crisis, is set to cease operation and be replaced by the debt-free Italia Trasporto Aereo (ITA), which will take over its assets and become an independent entity.

"The European Commission has found that Italia Trasporto Aereo S.p.A. ("ITA") is not the economic successor of Alitalia and, hence, it is not liable to repay illegal State aid received by Alitalia," the commission said in a separate release.

Alitalia will discontinue all operations starting October 15, while ITA is expected to launch flights early next month.

Earlier in the day, hundreds of Alitalia employees rallied in central Rome, demanding that the government cancels re-certification of the company's staff and extends the emergency payment funding as the new air carrier plans to employ only a quarter of its predecessor's personnel.