European Commission to investigate Italian government's bridge loan for Alitalia
13 Jun 2008
The European Commission has confirmed that it will investigate the grant of a €300 million ($465 million) bridge loan to Alitalia by the Italian government. The loan was granted through a specific decree in April this year. A subsequent decree, issued in May, enabled the airline to incorporate that loan as part of its equity capital.
These provisions enabled the embattled airline to avoid bankruptcy proceedings and also become eligible for possible privatisation.
"The Commission considers, at this stage, that this measure in favor of Alitalia could constitute state aid that is incompatible with the community rules in force and could therefore give the company an unjustified advantage over its competitors," the EC said.
The Commission noted that as the airline had already benefited from rescue and restructuring aid, the government could not "in principle grant it any more aid."
The EC, which has up to 18 months to conduct the investigation, said it would allow all interested parties to voice their opinions.
The carrier maintains that the loan is in line with EU law. "It's not a coincidence that it was called a bridging loan," chairman Aristide Police said, according to agency reports. "It is not aid. It's a loan with terms and pretty high interest rates."
