EU Grants Alitalia With €12.8m In Additional State Aid

On Thursday, the European Commission granted an additional €12.8 million ($15.5 million) in state aid to Alitalia. This is the fourth round of support the EU has approved for the struggling Italian flag carrier since the start of the pandemic. Meanwhile, talks are still ongoing over the transfer of assets to new and restructured national airline ITA, which aims to begin operating on July 1st.

EU Grants Alitalia With €12.8m In Additional State Aid
The European Commission gives a thumbs up to more aid for Alitalia. Photo: Vincenzo Pace | Simple Flying

Fourth round of COVID-specific aid

The state aid that the Commission has allowed the Italian government to provide its ailing national airline to compensate for COVID damages now totals €310 million ($376 million). Prior decisions to release funds were made in March this year and in December and September of 2020. The new round is meant to compensate for operating losses suffered in January, specifically due to the Italian government’s travel restrictions.

“The Commission found that the Italian measure will compensate for damages suffered by Alitalia which are directly linked to the coronavirus outbreak, as the loss of profitability on certain routes as a result of the containment measures during the relevant period can be considered as damage directly linked to the exceptional occurrence,” the EU executive said in a statement.

Cash could not come a moment too soon as, according to Bloomberg, the airline only paid its 11,000 employees half their salaries in March.

EU Grants Alitalia With €12.8m In Additional State Aid
The EU Commission is still investigating loans to Alitalia from 2017 and 2019. Photo: Vincenzo Pace | Simple Flying

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€1.3 billion still under investigation

However, the relaxed state aid rules adopted in March last year do not mean Italy is entirely off the hook with the EC. The Commission also said it continues to investigate the fairness of loans of up to €1.3 billion ($1.58 billion) awarded to Alitalia by the government in 2017 and 2019. Since 2008, loss-making Alitalia has received a total of €5.4 billion ($6.5 billion) to stay afloat.

Earlier government loans are not the only point of contention between Brussels and Italy over its airline. Talks between the two parties on Alitalia’s restructuring continue to drag on. Slot possession has reportedly been a particular gnarly part of the agenda. The EU requests that Alitalia specifically surrender slots at Milan’s Linate Airport and not transfer them to the new carrier ITA.

The airline’s CEO is looking to launch ITA flights in July. Photo: Tom Boon / Simple Flying

Aggressive rivals on the Italian market

Meanwhile, the Italian government stands ready to inject $3 billion ($3.64 billion) into its new flag carrier. Furthermore, it is eyeing a July commencement of operations.

“We need to start quickly because the (air traffic) market is picking up and … Alitalia rivals are acting aggressively, especially low-cost carriers,” Alitalia’s CEO Fabio Lazzarini said at a parliamentary hearing in Rome late last month.

As Reuters reports, Lazzarini specifically cited Ryanair’s plans to offer 100 routes in Italy over summer. He also stated that ITA is aiming to start flying on July 1st with a small number of aircraft that will grow over time.

A decision on a partner for the new airline is expected by mid-June, Lazzarini said. Talks have been held with Air France-KLM, Virgin Atlantic, and Delta, as well as Lufthansa.

What do you think of the future of Alitalia? Who will the government succeed in bringing in as a partner? Leave a comment below and let us know.