New lifeline for Alitalia: EU approves Ђ200 million aid

The European Union (EU) Commission has approved a grant worth Ђ200 million for Italian flag carrier Alitalia. The aid should resuscitate the airline and help alleviate the consequences of COVID-19. However, financial struggles had tortured the airline long before the pandemic began.

Alitalia would receive a Ђ200 million financial support from the Italian government, the EU Commission announced in a statement on September 4, 2020. 

The air carrier will get the State aid without regard to the fact it had been loss-making even before the pandemic hit the aviation industry.

Margrethe Vestager, the EU Antitrust Chief, stated that the State aid covered Alitalia’s losses that were directly related to COVID-19 travel restrictions. According to Vestager, Ђ200 million grant for Alitalia was “in line with EU State aid rules”.

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“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‘‘, Vestager stated in the European Commission’s press release.

It is not the first time Alitalia receives financial support. Italy's largest air carrier filed for bankruptcy in 2017. Over the time, there were several attempts to reanimate the struggling airline by reinjecting the state aid. In 2017, Alitalia received almost Ђ900 million in loans for the restructuring process. Two years later, in 2019, the carrier was granted by another Ђ400 million loan for the same purpose.

However, the large amounts of financial support raised doubts whether the airline’s restructuring process was being carried out according to the law. Due to a mass of complaints over competition policy issues, the EU Commission opened a formal investigation procedure on Ђ900 million loans in 2018 and a separate formal investigation procedure on an Ђ400 million loan  in October 2019.