European Commission: loans to Alitalia for 900 million euros are illegal

The European Commission determined that two state loans for 900 million euros granted by Italy to Alitalia in 2017 are illegal.

This was concluded in accordance with the European Union rules on state aid.

Therefore, Italy must recover the illegal state aid, plus interest, from Alitalia.

Alitalia is an Italian airline, headquartered in Fiumicino, Italy, which provides national and international air transport services, maintenance, ground handling and cargo transportation.

In addition, Alitalia is 49% owned by Etihad Investment Holding Company LLC and 51% by MIDCO S.p.A., which, in turn, is 100% owned by Compagnia Aerea Italiana S.p.A., a consortium of Italian banks and other companies.

European Commission and context

Why were the loans made? The company has been in deficit since 2008. At the beginning of 2017, Alitalia was in urgent need of liquidity, but had lost access to credit markets due to its deteriorating financial situation.

To keep Alitalia in operation, in May and October 2017 Italy granted the company two loans amounting to € 600 million and € 300 million, respectively.

At the same time, Alitalia was subjected to special bankruptcy procedures under Italian bankruptcy law.

Then, on April 23, 2018, the European Commission opened a formal investigation to determine whether the two loans complied with the European Union’s rules on state aid.

This followed a series of formal complaints received by the European Commission in 2017 from rival airlines, alleging that Italy had granted illegal and incompatible state aid to Alitalia, and Italy’s notification in January 2018 of the state loans as aid from rescue under the Commission Guidelines on rescue and restructuring aid.


According to the European Union rules on state aid, public interventions in favor of companies can be considered free of state aid, when the state acts not as a public authority, but on the terms that a private operator would have accepted under market conditions (the principle of the market economy operator, MEOP).

The Commission’s investigation showed that, in granting the two loans to Alitalia, Italy did not act as a private investor would have done, as it did not assess in advance the likelihood of repayment of the loans, plus interest.

In this regard, the European Commission’s assessment of Alitalia’s financial statements at the time showed that it was unlikely that Alitalia would be able to generate enough cash to repay the state loans on their maturity dates, nor could it sell its assets to raise enough cash. for the payment of the debt.


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