LONDON – The European Commission (EC) has approved plans for the Italian Government to inject €200m into national carrier Alitalia (AZ).
The grant is going to be used as a form of compensation for the airline’s damages incurred by the ongoing COVID-19 pandemic. EU competition regulators stated that the bailout is in line with Union law.
“[The money] will compensate the damage suffered by Alitalia that is directly linked to the coronavirus outbreak” and “does not exceed what is necessary to make good the damage”, the EC said in a statement.
A Legal Motion
As stated in EU laws, governments are allowed to invest money into struggling companies that are damaged by exceptional occurrences. The EC stated that the COVID-19 pandemic does indeed qualify as “exceptional”.
Between February and June, it was estimated that Alitalia lost around 250 million EUR due to the pandemic. Competition Commissioner Margrethe Vestager commented on how this will help Alitalia during the pandemic.
“This measure will enable Italy to compensate Alitalia for the damage directly suffered due to the travel restrictions necessary to limit the spread of the coronavirus.” She added that the EC will continue to work with member states to find workable solutions.
Further Struggles for Alitalia
It is common knowledge that the last few years have been a significant struggle for AZ. 2020 has been a particularly negative year for the airline, no thanks to the COVID-19 pandemic.
Back in February, AZ began restructuring through the removal of aircraft as well as unprofitable routes. A month after, Airways reported that the airline would be nationalized by the Italian state.
In the continued talks about nationalization, the Italian government then pledged €500m in state aid to the carrier. By May, as the pandemic was becoming much worse, the state then announced an additional €3bn injection into the company.
No End in Sight for Alitalia
It remains clear that in the case of AZ, it is a continuous battle of trying to make the airline financially attractive again. From failed bids all the way to nationalizing as a last resort, the Italian Government must make further strides post-pandemic to bring AZ back to its best.
In the meantime, the carrier has been given yet another lifeline. The question is, how long will the Italian carrier make it last?
Featured Image: Alitalia Airbus A320. Photo Credit: Wikimedia Commons