The two State loans granted to Alitalia breach European Union State aid rules

In early 2017, the Italian airline Alitalia was in urgent need of liquidity. In order to ensure that Alitalia could keep operating, since due to its deteriorated financial situation it had lost access to credit markets, in 2017 Italy granted the company two loans for the amount of 600 million euros and 300 million euros, respectively. 

In the context of the investigation, opened in April 2018 following a number of formal complaints from rival airlines and Italy’s notification in January 2018 of the State loans as rescue aid under the Commission’s Guidelines on Rescue and Restructuring aid, the Commission assessed whether the two loans complied with EU State aid rules.

In particular, the Commission examined whether Italy had acted not as a public authority, but on the basis of the market economy operator principle (MEOP), according to which public interventions in favour of companies can be considered free of State aid when the State acts on terms that a private operator would have accepted under market conditions. The Commission found out that Italy did not consider beforehand the probability of repayment of the loans, plus interest, and therefore did not act as a private investor would have. Since the financial statements of Alitalia showed that it was unlikely that the company would repay the loans within the agreed terms, according to the Commission, no private investor would have granted the loans. 

Neither could the State aid be approved under the Guidelines on Rescue and Restructuring aid, as Italy never submitted a restructuring plan for the return of the company to viability, nor was the company liquidated, in line with the conditions set out in the Guidelines.

As a result, Italy must recover from Alitalia the illegal State loans of 900 million euros, plus interest.

Esmeralda Dedej