State aid: Commission approves €199.45 million Italian support to compensate Alitalia for damages suffered due to coronavirus outbreak

Miguel Ángel Sanz, Unsplash

This article is brought to you in association with the European Commission.


The European Commission has found Italian €199.45 million support in favour of Alitalia to be in line with EU State aid rules. The measure aims at compensating the airline for the damages suffered due to the coronavirus outbreak.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This measure will enable Italy to compensate Alitalia for the damage directly suffered due to the travel restrictions necessary to limit the spread of the coronavirus. The aviation industry is one of the sectors that has been hit particularly hard by the coronavirus outbreak. We continue working with Member States to find workable solutions to support companies in these difficult times, in line with EU rules. At the same time, our investigations into past support measures to Alitalia are ongoing and we are in contact with Italy on their plans and compliance with EU rules.”

Alitalia is a major network airline operating in Italy. With a fleet of over 95 planes, in 2019 the company served hundreds of destinations all over the world, carrying about 20 million passengers from its main hub in Rome and other Italian airports to various international destinations. Since the start of the coronavirus outbreak, Alitalia has suffered a significant reduction of its services, resulting in high operating losses.

Italy notified to the Commission an aid measure to compensate Alitalia for the damage suffered from 1 March 2020 to 15 June 2020 resulting from the containment measures and travel restrictions introduced by Italy and other destination countries to limit the spread of the coronavirus. The support will take the form of a €199.45 million direct grant, which corresponds to the estimated damage directly caused to the airline in that period.

The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures granted by Member States to compensate specific companies or sectors for damage directly caused by exceptional occurrences.

The Commission considers that the coronavirus outbreak qualifies as such an exceptional occurrence, as it is an extraordinary, unforeseeable event having significant economic impact. As a result, exceptional interventions by the Member State to compensate for the damages linked to the outbreak are justified.

The Commission found that the Italian measure will compensate the damage suffered by Alitalia that is directly linked to the coronavirus outbreak. It also found that the measure is proportionate, as the compensation does not exceed what is necessary to make good the damage.

On this basis, the Commission concluded that the Italian damage compensation measure is in line with EU State aid rules.

Background

On the basis of complaints received, on 23 April 2018 the Commission opened a formal investigation procedure on €900 million loans granted to Alitalia by Italy in 2017.  On 28 February 2020, the Commission opened a separate formal investigation procedure on an additional €400 million loan granted by Italy in October 2019. Both investigations are ongoing.

Financial support from EU or national funds granted to health services or other public services to tackle the coronavirus situation falls outside the scope of State aid control. The same applies to any public financial support given directly to citizens. Similarly, public support measures that are available to all companies such as for example wage subsidies and suspension of payments of corporate and value added taxes or social contributions do not fall under State aid control and do not require the Commission’s approval under EU State aid rules. In all these cases, Member States can act immediately.

When State aid rules are applicable, Member States can design ample aid measures to support specific companies or sectors suffering from the consequences of the coronavirus outbreak in line with the existing EU State aid framework. On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities.

In this respect, for example:

  • Member States can compensate specific companies or specific sectors (in the form of schemes) for the damage suffered due and directly caused by exceptional occurrences, such as those caused by the coronavirus outbreak. This is foreseen by Article 107(2)(b)TFEU.
  • State aid rules based on Article 107(3)(c) TFEU enable Member States to help companies cope with liquidity shortages and needing urgent rescue aid.
  • This can be complemented by a variety of additional measures, such as under the de minimis Regulation and the General Block Exemption Regulation, which can also be put in place by Member States immediately, without involvement of the Commission.

In case of particularly severe economic situations, such as the one currently faced by all Member States and the UK due the coronavirus outbreak, EU State aid rules allow Member States to grant support to remedy a serious disturbance to their economy. This is foreseen by Article 107(3)(b) TFEU of the Treaty on the Functioning of the European Union.

On 19 March 2020, the Commission adopted a State aid Temporary Framework based on Article 107(3)(b) TFEU to enable Member States to use the full flexibility foreseen under State aid rules to support the economy in the context of the coronavirus outbreak. The Temporary Framework, as amended on 3 April and 8 May 2020, provides for the following types of aid, which can be granted by Member States: (i) Direct grants, equity injections, selective tax advantages and advance payments; (ii) State guarantees for loans taken by companies; (iii) Subsidised public loans to companies, including subordinated loans; (iv) Safeguards for banks that channel State aid to the real economy; (v) Public short-term export credit insurance;(vi) Support for coronavirus related research and development (R&D); (vii) Support for the construction and upscaling of testing facilities; (viii) Support for the production of products relevant to tackle the coronavirus outbreak; (ix) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions; (x) Targeted support in the form of wage subsidies for employees; (xi) Targeted support in the form of equity and/or hybrid capital instruments.

The Temporary Framework will be in place until the end of December 2020. As solvency issues may materialise only at a later stage as this crisis evolves, for recapitalisation measures only the Commission has extended this period until the end of June 2021. With a view to ensuring legal certainty, the Commission will assess before those dates if it needs to be extended.

The non-confidential version of the decision will be made available under the case number SA.58114 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

More information on the Temporary Framework and other action the Commission has taken to address the economic impact of the coronavirus pandemic can be found here.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Challenges facing the COVID-19 vaccination campaigns

Civilian deaths in Afghanistan hit record high – UN

Visiting North Korea, UN relief chief spotlights funding shortfall to meet humanitarian needs

Meet Alice, the battery-powered plane that could herald the age of electric air travel

Britain in and out of the EU

Statement by the Brexit Steering Group on UK government White paper

Cocaine and opium production worldwide hit ‘absolute record highs’ – major threat to public health says UN study

Ebola: EU releases additional €3.5 million to tackle epidemic

Voices of young climate action activists ‘give me hope’ says UN chief

European Semester 2019 Spring Package: Commission issues recommendations for Member States to advance sustainable and inclusive economic growth

Easing ‘classroom crisis’ in Côte d’Ivoire, brick by (plastic) brick

The United Kingdom’s decision to leave the European Union will impact young people’s future the most

5 ways COVID-19 has changed workforce management

Parliament to ask for the suspension of EU-US deal on bank data

Coronavirus Global Response: European Commission pledges €300 million to Gavi

Trump’s MAGA policy remains unchanged as EU warns to impose additional retaliation tariffs on US products

European Defence Fund on track with €525 million for Eurodrone and other joint research and industrial projects

COVID-19 creates a perfect storm for the extreme weather season

Healthcare for refugees: a necessary symbiosis of medicine and politics

EU climate law: MEPs want to increase emission reductions target to 60% by 2030

A geared turbofan at Pratt & Whitney's production hub in West Palm Beach (copyright: Pratt & Whitney - a UTC Company- 2018; Source: Pratt & Whitney's website, media center)

The EU Commission approves UTC’s acquisition of Rockwell Collins under conditions

Slovakia and its failure to abide by the European law

How to help an ageing population stay wealthy for longer

Soil pollution ‘jeopardizing’ life on Earth, UN agency warns on World Day

“Beyond the beach: tackling plastic pollution upstream”, a Sting Exclusive by Erik Solheim, Head of UN Environment

Google’s bare truth: Europe’s Chief denies EU accusations but admits they “don’t always get it right”

FROM THE FIELD: Persons with disabilities bike towards sustainability

Our health systems are under pressure. Here are 9 ways to remedy that

Hardware is a cybersecurity risk. Here’s what we need to know

Hatred ‘a threat to everyone’, urges Guterres calling for global effort to end xenophobia and ‘loathsome rhetoric’

What talent means in the post-COVID-19 workplace

What will Germany look like after the next election?

New legislation on transparency and sustainability of the EU risk assessment model in the food chain

This woman changed the world of work – and you’ve probably never heard of her

‘Grave consequences’ await if new deadly escalation of violence in Gaza continues – top UN official

The Dead Sea is drying up, and these two countries have a plan to save it

African elephants under continued threat of poaching, warns UN-backed report

AIESEC Vlog

Four million have now fled Venezuela, UN ramps up aid to children who remain

Ercom, cutting-edge Telco solutions from Europe

As ride-hailing firms drive into the future, who is being left behind?

Syrian crisis: €5.3 billion mobilised by donors for 2021 and beyond at 5th Brussels Conference

Carnage must stop in northwest Syria demands Lowcock, as attacks intensify

New round of bargaining for the 2014 EU budget late in autumn

Sudan: European Union provides €30 million in humanitarian assistance

At last Germany to negotiate the costs for a really cohesive Eurozone

UN evaluates progress in improving peacekeeping performance

The US + Britain trivialize mainland Europe, NATO and the EU

Khashoggi case highlights ‘very worrying practice’ of overseas abductions, says UN expert

What does global health translate into?

How Costa Rica’s environment minister talks to his daughter about climate change

Polluted lungs: health in the center of environment discussion

Here are 3 lessons Europe can learn from China’s flourishing start-ups

Geopolitics and investment in emerging markets after COVID-19

Canada needs to increase foreign aid flows in line with its renewed engagement

EU Ombudsman investigates the European Commission

Coronavirus: EU global response to fight the pandemic

SCADA Security Conference 2017 in Prague, Czech Republic

Brexit: Six more months of political paralysis or a May-Corbyn compromise?

COVID-19 vaccination campaigns and their challenges

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s