EU competition regulators on Friday gave the green light to Alitalia’s successor Italia Trasporto Aereo (ITA) and also ordered the Italian flag carrier to repay 900 million euros ($1.1 billion) in illegal state aid.
The European Commission said a 1.35 billion euro capital injection by Italy into ITA over the next three years is in line with EU state aid rules as it will be done according to market conditions.
The Italian government has set aside a total of 3 billion euros for ITA but will need approval from the Commission to inject the remaining 1.65 billion euros.
ITA will operate with less than half of Alitalia’s fleet of aircraft and will only be allowed to take over limited parts of its predecessor’s handling and maintenance businesses. Alitalia’s brand will be sold in an open tender.
The Italian government granted 900 million euros to Alitalia in 2017, when the carrier was struggling to survive after its workers had rejected a restructuring plan.
Since then, Alitalia has been run by state-appointed administrators and the state granted additional funds to allow it to survive, including another 400 million euro loan, which is also under investigation by the EU.
In the coming weeks, Alitalia is due to sell some of its assets to the new, state-owned ITA under a plan masterminded by the government.
Friday’s decision by the Commission does not come as a surprise for the Italian government, which had negotiated with Brussels for months to avoid that the verdict on the 900-million euro loans could hinder the launch of ITA.
ITA is not liable to repay illegal state aid received by Alitalia, Brussels said on Friday.
ITA is due to start flying on Oct. 15 and will employ only a small part of Alitalia’s 11,000 total workforce.