Italy’s new ITA clear to take off without Alitalia baggage

Rising from the ashes of the now defunct Italian flag-carrying airline Alitalia, Italia Transporto Aero (ITA) has been given the all-clear by EU competition regulators to launch as a new Italian carrier but without having to repay some €900 million in illegal state loans granted to Alitalia. ITA will begin operations with approximately half of Alitalia’s fleet of aircraft, but it is being restricted in what parts of the failed Italian carrier it can take over in relation to handling and maintenance businesses. Alitalia is not expected to fully repay the government loans owing to a lack of assets. The Italian government granted Alitalia two loans worth a total of €900 million in 2017 and provided further funding of €400 million in 2019, the latter currently under investigation by the EU.

The European Commission’s assessment of Alitalia’s balance sheet at the time showed that it was unlikely the carrier would be able to generate sufficient funds to repay the loan, nor raise sufficient capital through the sale of assets to repay it. Consequently, the loans were classified as illegal state aid. EU Competition head Margrethe Vestager said in a statement: “The two public loans worth €900 million euros granted by Italy to Alitalia gave the company an unfair advantage over its competitors. They must now be recovered by Italy.” The Commission also confirmed that Alitalia’s brand and loyalty program would be sold by open tender.

ITA is aiming to start flying on October 15 but will be employing a small percentage of original Alitalia staff. However, there have been many protests in Rome over layoffs from Alitalia and Andrea Cuccello, the head of CISL labor union stated that: “There must be no redundancies. All the (Alitalia) workers must be loaded on board,”, adding that the government should extend a lay-off scheme for more than 7,500 workers for three years. The Italian government has earmarked €3 billion euros for ITA, but the Commission has only given permission for an initial €1.35 billion capital injection over the forthcoming three years.