900 million aid to Alitalia was illegal

Rome Just under a month, then Ita should take off into the air. The new airline abbreviation is already emblazoned on some old Alitalia machines, but there is no more time for repainting. The homepage of “Italia Trasporto Aereo” – the first flights can already be booked – is very reminiscent of its predecessor, even the font is the same. Ita should actually be a completely new beginning.

Shortly before the restart, the Italian airline is now also financially overtaken by the past: According to the competition watchdogs of the EU Commission, Alitalia is said to have received illegal aid amounting to 900 million euros. For years, the Italian state has repeatedly put money into the airline, which is on the verge of bankruptcy.

The government must now demand the money back from Alitalia – plus interest, as the Brussels authority said on Friday. This is the only way to help restore fair competitive conditions in Europe’s air traffic, said Competition Commissioner Margrethe Vestager.

It is therefore about payments from May 2017. At that time, Alitalia is said to have received a 600 million euros loan from the state, only a few months later another 300 million euros were added.

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For months, the Italian government had wrestled with Brussels for the successor airline. It was supposed to start in April, then everything was postponed again. It was only in mid-July that the EU Commission gave the green light for Ita, which will take over the pure flight operations – but otherwise separate from its predecessor. Therefore, the new company does not have to raise the 900 million, it is not considered to be the “economic successor” of Alitalia. Even so, the news is the next dark chapter in a long history of failure.

Alitalia has been making losses since 2008

Alitalia is said to have made losses since 2008, and has been insolvent since 2017. In 2019 Italy injected a further 400 million euros. In the pandemic, the state had to step aside with three billion corona aid.

But none of the Italian governments wanted to let the carrier die. The prestige of a national airline seemed too important, a flying symbol with which even the Pope had been driving around the world for 40 years – always with two machines in case one should fail.

For a long time, Alitalia was no longer considered viable on its own by industry experts. But the national egoism prevailed. Lufthansa was repeatedly seen as a potential buyer. But Rome has so far categorically refused to take over from Germany.

And even Etihad, the airline from Abu Dhabi that is well equipped with state funds, could not save the Italians: In 2015, the airline from the emirate took over 49 percent of the shares and wanted to set up a feeder network into the desert with other European airlines such as the German Airberlin to fill their wide-body planes for Asia. Just two years later, Etihad turned the money off again, and shortly afterwards Alitalia – similar to Airberlin a short time later – went bankrupt.

Ita will only have 2800 employees for the time being

Ita, the new airline, for the time being 100 percent state-owned, will be significantly slimmer than the old colossus. Ita will only hire 2,800 employees – Alitalia recently had more than 10,000 employees. Almost 30,000 candidates are said to have applied for the new positions.

Ita is not automatically allowed to take over old Alitalia staff, all positions will be advertised again. Most Alitalia employees, of whom almost 7,000 are currently on short-time work due to Corona, will therefore soon receive their dismissals.

Unlike Alitalia, however, the new company does not offer the industry-standard collective bargaining agreement. According to industry insiders, wages should be 15 to 20 percent below the Alitalia level. Again and again there have recently been demonstrations by Alitalia employees – so far in vain: there is still no agreement on the new contract with the trade unions.

Ita will also give up almost half of the aircraft. Alitalia currently operates 89 planes, Ita’s fleet will comprise just 52 – 45 of them for medium-haul flights and only nine for long-haul flights. The fleet is expected to grow to 78 machines as early as next year, and the workforce is to be expanded to at least 5,500 by 2025. What will remain: the membership in the airline alliance Skyteam, which also includes the US company Delta and Airfrance / KLM.

The last Alitalia chapter, however, is not yet. The 400 million euros in government aid from 2019 are still being examined by the EU Commission. Again, Vestager’s people could end up seeing illegality. “The investigation is ongoing,” said the EU Commissioner. “We expect to make a final decision shortly.”

More: Alitalia successor Ita receives licenses – ticket sales can begin