European Commission begins probe of Italian government’s loan to Alitalia

The European Commission has begun what it describes as an “in-depth investigation” into whether a loan amounting to €300 million ($465 million) from the government of Italy to the airline Alitalia violates rules on state aid. Alitalia, the flag carrier airline of Italy, is headquartered in Rome, Italy, with its hub at Leonardo da Vinci Airport, Rome.

The investigation has complicated efforts to sell Alitalia, which is losing €3 million a day, according to analysts. The airline has lost a total of nearly €4 billion in 8 years.

The European Commission has ruled that that the Italian government’s loan to the ailing Alitalia “amounted to an illegal subsidy” and that the  loan “may give the company an unjustified advantage over its competitors.”

In a statement, the European Union executive said: “At this stage, the Commission believes that the loan – which the Italian company has the option of incorporating into its equity capital – could constitute aid that is incompatible with the common market.”

If the European Commission finds that the loan given to Alitalia is illegal, the airline will have to repay the €300 million (US $465 million) to the Italian government.