State aid: Commission concludes Italian loans worth €900 million to Alitalia are illegal aid

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

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.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Following our in-depth investigation, we reached the conclusion that two public loans worth €900 million granted by Italy to Alitalia gave the company an unfair advantage over its competitors, in breach of EU State aid rules. They must now be recovered by Italy from Alitalia to help restore a level playing field in the European aviation industry.”

Alitalia is an Italian airline, providing domestic and international air transport services, maintenance, ground handling and cargo transportation. It has been loss-making since 2008. In early 2017, Alitalia was in urgent need of liquidity, but it had lost access to credit markets due to its deteriorated financial situation. In order to keep Alitalia operating, in May and October 2017, Italy granted the company two loans for the amount of €600 million and €300 million, respectively. At the same time, Alitalia was placed into special bankruptcy proceedings under Italian bankruptcy law.

On 23 April 2018, the Commission opened a formal investigation to establish whether the two loans were in line with EU State aid rules. This followed (i) a number of formal complaints received by the Commission in 2017 from rival airlines, alleging that Italy had granted unlawful and incompatible State aid to Alitalia, and (ii) Italy’s notification in January 2018 of the State loans as rescue aid under the Commission’s Guidelines on Rescue and Restructuring aid.

Under EU State aid rules, public interventions in favour of companies can be considered free of State aid, when the State acts not as a public authority, but on terms that a private operator would have accepted under market conditions (the market economy operator principle – “MEOP”).

The Commission’s investigation showed that, when granting the two loans to Alitalia, 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. In this respect, the Commission’s assessment of Alitalia’s financial statements at the time showed that Alitalia was unlikely to be able to generate enough cash to repay the State loans by their maturity dates, nor could it sell its assets to raise enough cash for the debt repayment.

On this basis, the Commission concluded that no private investor would have granted the loans to the company at the time and that the two loans constituted State aid within the meaning of EU State aid rules.

The Commission also found that the aid could not be approved as rescue aid under the Guidelines on Rescue and Restructuring aid, in line with the notification by Italy. This is because the loans were not reimbursed within six months, 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.

The Commission therefore concluded that the loans gave Alitalia an unfair economic advantage vis-à-vis its competitors on national, European and world routes, that amounted to incompatible State aid. Italy must now recover the illegal State aid amounting to €900 million plus interest from Alitalia.


The Commission has today a separate decision on (i) Italy’s capital injections into a new air carrier ITA, and (ii) that ITA is not the economic successor of Alitalia. More information can be found here.

Alitalia is an Italian airline, headquartered in Fiumicino, Italy, providing domestic and international air transport services, maintenance, ground handling and cargo transportation. Alitalia is 49% owned by Etihad Investment Holding Company LLC and 51% owned by MIDCO S.p.A., which, itself, is 100% owned by Compagnia Aerea Italiana S.p.A., a consortium of Italian banks and other companies.

On 28 February 2020, the Commission opened a separate formal investigation to assess whether a €400 million loan granted by Italy to Alitalia in 2019 constitutes State aid and whether it complies with the rules on State aid to companies in difficulty. This investigation is ongoing.

A non-confidential version of the decision will be made available under case number SA.48171 in the State Aid Register on the competition website once any confidentiality issues will have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.

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