Big Story 10

Alitalia loans may constitute illegal state aid: EU

FILE PHOTO: Alitalia's logo is seen on top of the headquarters at Fiumicino international airport in Rome October 14, 2013. REUTERS/Max Rossi

BRUSSELS (Reuters) - Alitalia [CAITLA.UL] may have benefited from illegal state aid, EU antitrust regulators said in a preliminary view on Monday, after the Italian government provided the lossmaking airline with two loans worth 900 million euros ($1.1 billion) until it finds a buyer.

“The Commission has concerns that the duration of the loan, extending from May 2017 until at least December 2018, exceeds the maximum duration of six months allowed for a rescue loan under the guidelines,” the European Commission said in a statement.

The Commission, which can order Italy to recover the money if it rules that the aid is illegal, also voiced doubts as to whether the aid was limited to the minimum necessary.

Alitalia entered into insolvency proceedings in May 2017 and the two state aid loans provided by Italy triggered complaints to the European Commission.

Italy’s quest to find a buyer for Alitalia’s assets has attracted bids from easyJet and Lufthansa and a source told Reuters budget carrier Wizz Air has also put in an offer.

Consortium Compagnia Aerea Italiana (CAI) owns 51 percent of Alitalia while Etihad Airways holds 49 percent.

Reporting by Foo Yun Chee; editing by Robert-Jan Bartunek and Jason Neely