Last Friday, February 28, 2020, the European Commission and its respective officers have officially opened an investigation over the €400 million loans granted by the Italian government to Alitalia, Italy’s flagship carrier. The €400-million deal reportedly comes on top of a €900-million loan extended by Rome to Alitalia in 2017, reports Reuters.

Alitalia has allegedly been suffering for years and the company has been in decline. The Financial Times notes that the airline has failed to issue its profits in 15 years. Industry experts deduce that the company is constantly losing millions per week.

The Italian government’s support for the airline came in 2019, with the country issuing a statement that the financial aid was geared towards “[facilitating] the streamlining of the company in order to attempt to sell its assets.”

Alitalia’s €400m Loan

Meanwhile, a €900 million loan by Rome is also under investigation by the EU commission. The funding was given by Rome to the carrier in 2018.

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Both loans are being looked into to gauge if these fall under illegal state aid, notes the New York Times. In a statement, the European Commission said they have launched an investigation to see if the “loan granted to Alitalia constitutes state aid and whether it complies with the rules on state aid to companies in difficulty.”

In an interview with the Financial Times in 2019, economic development minister Stefano Patuanelli said that the €900 million loans were not considered state aid. Instead, the funding acts as a “management of a sale process.” A private buyer has yet to be found for the struggling carrier.

According to the New York Times, the European Commission launched its investigation after receiving numerous reports on the issue. However, the agency declined to provide details of the said complaints. The probe intends to “provide clarity to Italy and the company as well as interest buyers,” shares the EU commission.

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