The European Commission has approved a grant of just under €200 million for Italian flag carrier Alitalia.

The €199.45 million grant has been found to be in line with EU State aid rules, as it covers losses relating directly to Covid-19 travel restrictions between March 1 and June 15 this year, as executive vice-president Margrethe Vestager, in charge of competition policy, explains:

“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. The aviation industry is one of the sectors that has been hit particularly hard by the coronavirus outbreak.

“We continue working with Member States to find workable solutions to support companies in these difficult times, in line with EU rules. At the same time, our investigations into past support measures to Alitalia are ongoing and we are in contact with Italy on their plans and compliance with EU rules.”

The ongoing investigations Vestager refers to relate to complaints received surrounding €900 million in loans granted to Alitalia by Italy in 2017, followed by a further €400 million loan granted in 2019.

Italy’s largest airline has been loss-making for sometime, certainly before the arrival of Covid-19 – it entered bankruptcy proceedings in 2017, and there have been a number of aborted takeover attempts, including Easyjet’s discussions with Delta and Italian rail company Ferrovie dello Stato Italiane.

The Commission made it clear in its ruling that “the Italian measure will compensate the damage suffered by Alitalia that is directly linked to the coronavirus outbreak”, adding that “the measure is proportionate, as the compensation does not exceed what is necessary to make good the damage”.