Italian state loan to Alitalia under investigation by European Commission

Photo: © Phillip Rohmberger / IFN

Regulators from the European Union are launching an investigation into a €400 million (US $441 million) state loan to Alitalia from the Italian government.

The European Commission (EC) opened a probe into the loan on Friday, after receiving ‘a number of complaints’ that the credit might violate the EU’s state aid rules.

In a statement, the EC outlines that the “opening of an in-depth investigation is a standard step“, and that other parties, including the Italian government, have the opportunity to provide their views on the matter. “The Commission is working closely with the Italian authorities on the matter“.

The 400 million Euro loan was approved by the Italian government in December 2019. This comes on top of an already existing €900 million (US $991 million) bridging loan for Alitalia from 2017, which is also under investigation in a separate probe since April 2018.

Alitalia has not made a profit for years and a key reason why the airline is still alive are these loans provided by its home country. The carrier was placed under extraordinary administration under Italian bankruptcy law in May 2017, after its staff rejected a plan for cost-reduction.

The Italian airline’s fate could depend on the outcome of the EU’s investigations.

In addition to Alitalia’s existing financial troubles, the company is now also battling with decreased demand due to the Coronavirus outbreak. The potentially deadly virus originated in Wuhan, China, but has since spread to other countries, including Italy. Many routes to and from Italy are currently operating with reduced capacity and some have been cancelled entirely.