Italy is under scrutiny again from the European Union over its latest bailout to Alitalia.
The Chamber of Deputies, Italy’s lower house, approved a 400 million Euro bailout in late January after the Senate approved the measure in December. The loan will keep the lights on at Alitalia until at least midyear, but includes a clause which mandates payback within six months with interest. It also states that the point of the loan is “to facilitate the streamlining of the company in order to attempt to sell its assets.”
Now the European Union is investigating the loan, issuing the following statement:
“The European Commission has opened an in-depth investigation to assess whether Italy’s €400 million loan granted to Alitalia constitutes state aid and whether it complies with the rules on state aid to companies in difficulty.”
State aid is legal if it is made on similar terms to what a private firm would have accepted on the open market. Consequences for an illegal loan under EU rule can include harsh fines.
But I have to imagine that Alitalia is not all that nervous today. After all, Italy provided Alitalia a 900 million Euro bridge loan in 2017. That also launched an EU probe in April 2018…which remains ongoing.
Alitalia continues to lose money on a daily basis and COVID-19 certainly cannot be helping matters.
Alitalia is an Italian fixture. Like Air India and South African Airways, it is not going anywhere anytime soon. Whatever the EU investigation ultimately reveals, I suspect it won’t matter as long as Italy wants to preserve its flag carrier.
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