Airline Alitalia set to land for good — but legal battle not over
Rome trumpets ‘solution’ on successor to Italian flag carrier, while Brussels says it will remain vigilant.
Fasten your seatbelt. This may be the last summer you will be able to fly Alitalia, but the
iconic Italian airline’s legal saga is far from over.
The struggling flag carrier will stop operating on October 15, when its new public-owned successor called ITA will take off, the Italian government announced on Thursday after months of
negotiations with Brussels to make sure that Rome's rescue plan complies with EU law.
"Discussions with the European Commission have made it possible to reach a constructive and balanced solution, which guarantees the discontinuity needed to comply with European law," the Italian Economy Ministry
said, adding that ITA will start flying on October 15. Alitalia will cease operations the same day.
But Brussels sounded cautious.
"The Commission takes note of today’s announcement by Italy,” a spokesperson in Brussels said in a statement, which stressed that “no formal decisions have been taken at this stage” on Alitalia’s restructuring or on other pending state aid probes.
The EU’s competition watchdog also stressed that it “remains in close contact with the Italian authorities to ensure that the launch of ITA as a new and viable market player is in line with EU state aid rules.”
Earlier this year, Brussels
raised concerns about the creation of a new public-owned company, with an initial capital of €3 billion, to succeed
struggling Alitalia.
The Commission was particularly worried about so-called economic continuity between the two companies and Rome's initial plans to transfer some of Alitalia's assets to ITA without organizing a public tender.
Those hurdles have been cleared during negotiations with Brussels. Italy can now move forward with cash transfers to ITA and proceed with a memorandum of understanding to transfer some of Alitalia's activities to its successor, the ministry said.
According to ITA, the European Commission green-lit the company’s industrial plan on Thursday in a letter sent to Italian authorities. A few hours later, ITA’s board approved the new industrial plan and
circulated a statement providing some key numbers on the future of the company. ITA will start with 52 aircraft and it plans to operate with 105 planes by the end of 2025.
Last year, the previous Italian government led by Giuseppe Conte decided to create a new public-owned company called ITA and
earmarked €3 billion to be injected as initial capital. Under the latest plan, negotiated by ministers in Prime Minister Mario Draghi’s cabinet, ITA will begin operations with an initial €700 million injection and will receive the rest later.
Italians consider Alitalia “as a family thing, even if a bit expensive,” as Draghi
put it earlier this year.
In a bid to show that Brussels and Rome are now totally on the same page, Transport Minister Enrico Giovannini
said the new company will operate “with a view to innovation and digitalization, in line with the European principles underlying the National Recovery and Resilience Plan.”
But the story is not over yet, for at least two reasons.
ITA will start flying in a difficult economic situation, with a general decrease of flights due to the coronavirus pandemic and therefore the possibility of the need for more public support, which might require Brussels’ approval.
In addition, the Commission still has to decide whether two previous tranches of public support — granted in
2017 and
2019 and totaling approximately €1.3 billion — amount to illegal state aid.
If Rome and Brussels have agreed on what “economic continuity” means, ITA and Alitalia should now be considered as separate companies. As a result, it would be up to the old Alitalia to repay any improper state aid, shall Brussels conclude that subsidies were illegal.
“The Commission’s main objective is to come to legally solid decisions as soon as possible,” the EU executive said. But this is
not the first time Brussels has promised an imminent decision on Alitalia’s past aid.