Italy’s ITA gets EU nod to take off without Alitalia’s debts

Italy’s new state-backed airline Italia Trasporto Aereo SpA got approval for government funding and won’t have to bear debt from its stricken predecessor Alitalia, the European Commission said on Friday.

While the European Union’s antitrust arm outlawed 900 million euros ($1.1 billion) of Italian subsidies to long-suffering flag carrier Alitalia, it also approved Italy’s capital injections of 1.35 billion into ITA, saying the new airline isn’t liable to repay Alitalia’s illegal aid.

“Italy has demonstrated that there is a clear break between Alitalia and the new airline ITA, and that its investment in ITA is in line with terms that a private investor would have accepted,” Margrethe Vestager, the EU’s antitrust chief, said in a statement. “Once ITA takes off, it is for Italy and ITA’s management to make use of this opportunity once and for all. And we will continue to do our part to ensure fair competition in the European aviation sector.”

ITA, plans to start services on Oct. 15, after months of talks with European Commission officials over terms of the overhaul and aid previously granted to Alitalia.

EU officials have spent months wrangling with Rome and airline officials over the branding, routes, staffing and equipment for the new airline. Vestager has previously said that the new carrier has to be efficient enough to be economically self-sufficient, and that it must pay fair market prices for Alitalia’s assets, including its corporate identity and livery.

Italy’s national airline collapsed in 2017 after years of failing to make a profit amid increasing competition from low-cost carriers like Ryanair Holdings Plc. State rescues for other airlines have already been criticized by Ryanair for keeping governments’ favored companies alive while others struggle from coronavirus-related travel restrictions that have slammed revenue.

EU state aid rules forbid governments granting loans on preferential terms that a company wouldn’t get commercially.