Lots of smart people saw this coming. The Italian government was desperate to save Alitalia, the historic flag carrier. Given the importance of the airline to the country, this was understandable. The problem is EU rules bar governments from providing most types of aide to beleaguered airlines.
The European Union’s antitrust watchdog said Friday that it has launched an investigation into a loan of 400 million euros ($440 million) from the Italian government to national airline Alitalia to establish whether the money is illegal state aid.
The watchdog, the European Commission, said in a statement that the aim is to assess if the “loan granted to Alitalia constitutes state aid and whether it complies with the rules on state aid to companies in difficulty.”
Alitalia has been in financial trouble for several years. The commission, which polices antitrust and state aid issues, said that Italy had announced the loan to Alitalia late last year and that the money was meant “to facilitate the streamlining of the company in order to attempt to sell its assets.”
The European Commission said it launched the probe after receiving a number of complaints about the loan. No details were provided about those who complained or what their suspicions might be.
Under EU rules, government financial aid to struggling companies can be considered legal if it is made on terms that a private firm would have accepted under market conditions.
In 2018, the commission launched a separate investigation into a €900 million bridge loan that Rome granted to Alitalia, also to ascertain whether it was state aid. That probe continues.
This article was written by The Associated Press from The Associated Press and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to firstname.lastname@example.org.
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Photo credit: Alitalia may have taken illegal state aid from the Italian government. The European Union is looking into the matter. Leandro Ciuffo / Alitalia