UPDATE 1-EU's Almunia mulls looser aid rules for airlines

BRUSSELS, April 19 (Reuters) - The European Commission is considering loosening stringent EU rules for state aid to help airlines hit by millions of euros in lost revenues due to the volcano crisis, the EU's competition chief said on Monday. The International Air Transport Association (IATA) said on Monday the closure of most of Europe's airspace because of a huge cloud of ash from an Icelandic volcano could cost the airline sector as much as $250 million a day. [ID:nLDE63I0GA] [ID:nLDE63I007]

The Commission, the European Union's executive, may take measures similar to those taken in the wake of the Sept. 11 attacks nearly a decade ago, Joaquin Almunia told a conference.

"I am looking carefully at what we did after Sept. 11. We can use similar instruments. We are indeed facing exceptional circumstances," he said.

"If member states would decide to help with state aid and provided conditions for receiving state aid were not discriminatory, we are ready to think in a framework similar to after Sept. 11," Almunia added.

The Commission, tasked with ensuring a level playing field in the 27-member EU, has to approve all state aid.

Almunia is due to meet EU Transport Commissioner Siim Kallas and Monetary Affairs Commissioner Olli Rehn later on Monday to discuss the issue.

After the Sept. 11 attacks, the Commission allowed aid to compensate airlines for losses directly resulting from the attacks and also made it easier for airlines to coordinate capacity.

Airline shares fell in early trade on Monday. (Reporting by Foo Yun Chee; Editing by Jon Loades-Carter)