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Tags :Continental Europe, Alitalia, European Commission
The European Commission concluded (12-Nov-08) that the sale of Alitalia’s assets does not constitute State aid provided that the Italian authorities fully comply with the undertakings they have given. The sale is planned in the context of the special administration procedure which will lead to the winding-up of the Italian airline.
The Commission has therefore given Italy the go-ahead to start selling the assets. The decision follows the Commission’s earlier decision to close the official State aid investigation procedure it started on 11-Jun-08 to look into a EUR300 million loan from Italy to Alitalia. The Commission’s conclusion was that the loan was unlawful aid and incompatible with the common market.
Mr Tajani, Vice-President of the Commission responsible for transport, said: “Today’s decisions will help to clarify the situation of Italia, which is experiencing serious difficulties and has been placed under special administration. With the special administrator, Mr Fantozzi, due to start selling the airline's assets prior to its liquidation, the Commission is monitoring this procedure while putting in place guarantees that transactions will be made at market prices. This is the purpose of appointing a monitoring trustee. With these decisions, I am convinced that a new, more dynamic air transport market will be able to develop in Italy. This process will lead to the emergence of a private airline, smaller in size but more efficient. In previous cases, even very recent ones, involving airlines facing similar difficulties, I have seen that airlines can not only recover and flourish but also compete successfully in the interests of passengers and of the aviation industry, which is essential for competition in Europe.” By finding that the EUR300 million bridging loan is unlawful and requesting that it be paid back, the Commission is ensuring the proper application of State aid rules.
Alitalia’s finances, which have been very difficult in the last few years, were crippled following the failure of various industrial initiatives and attempts to revive the company. This situation resulted in the suspension of payments and the start of the special administration procedure on 29- Aug-08.
The Commission has concluded that the sale of Alitalia’s assets is not State aid if the sale takes place on market terms – provided that the Italian authorities live up to their commitments. The Commission considers that the procedure as notified by Italy is guaranteed to maximise the value of assets sold which is in the creditors’ interest.
The procedure for sale of the assets provides for several different levels of monitoring which will ensure that the sale is on market terms. It will nevertheless be supervised by a monitoring trustee who will ensure compliance with the decision and the commitments given. The monitoring trustee will be appointed very quickly (in two days) and will in particular ensure that assets are disposed of on market terms. The monitoring trustee will be required to compile an exhaustive report on this point in the two weeks following appointment. If the Commission is dissatisfied with any aspect of the procedure, it can still take the initiative and re-open the case.
The solution thus devised is similar to that which ended with the winding-up of Sabena and more recently Olympic Airlines.
Under the above procedure, the special administrator has received more than 60 expressions of interest, 36 of which have been confirmed and have been received from national as well as other EU and international operators. Compagnia Aerea Italiana (CAI) has made a bigger bid than others. The Commission notes that there is no continuity between Alitalia and CAI, Furthermore, CIA will conduct its passenger air transport activity on the basis of its own business plan, which has been drawn up with specific operational targets in terms of fleet management, personnel and flight times and on market terms. The Commission also notes that CAI will carry 69% of the air passengers for which Alitalia currently accounts.
Lastly, after conducting a detailed investigation into the conditions attached to a EUR300 million loan awarded by the Italian authorities to Alitalia on 23 April 2008, the Commission concluded that the loan was unlawful State aid and incompatible with the common market. Alitalia had already received rescue and restructuring aid in the past. Italy therefore has to take the necessary action to recover that State aid from Alitalia.
(c) Centre for Asia Pacific Aviation. Date posted: 13-Nov-08
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Alitalia - The European Commission adopts two State aid decisions 
