Commission Decision (EU) 2023/2160of 27 March 2023on State aid in favour of Alitalia (new loan to Alitalia) SA.55678 (2019/NN), implemented by Italy(notified under document C(2023) 1713)(Only the Italian version is authentic)(Text with EEA relevance)

Table 2

Alitalia’s free cashflow including debt service payments and cash position (in millions of euros)

Note:

Alitalia’s cash position in Q1 2018 includes EUR 300 million in State loan (the second loan of the 2017 loans).

(61) Moreover, Alitalia generated negative EBITDA of EUR 120 million and EUR 14 million in 2018 and 2019 respectively.

Table 3

Alitalia’s EBITDA

20182019EBITDA(120)(14)

(62) The publicly available information for 2019 shows equally that Alitalia continued to be in a difficult financial situation. According to reports in the press

See https://www.reuters.com/article/alitalia-rescue-loss-idUSL8N28T4OB.

, Alitalia was loss-making in October 2019

See https://www.reuters.com/article/alitalia-rescue-atlantia/alitalia-set-for-temporary-reprieve-as-rescue-deadline-nears-sources-idUSL5N26Z4I6.

. On 26 November 2019, the press cited Italian Minister of Economic Development, Mr Patuanelli, saying that at the moment there is no market solution for Alitalia, while in December 2019 he was reported saying that Alitalia was losing EUR 2 million per day, clarifying that the daily loss fluctuated during the year

https://www.ilsole24ore.com/art/alitalia-sale-conto-la-compagnia-patuanelli-perde-2-milioni-giorno-ACQ1wO7. In the same interview, the Minister of Economic Development also explained that, after the negotiations to sell Alitalia to a consortium including Ferrovie dello Stato, Atlantia and the US airline company, Delta Airlines, had failed, on 2 December 2019 there were only two options: the liquidation of the company or a new sale procedure, https://www.ilmessaggero.it/economia/news/alitalia_ilva_patuanelli_intervista_messaggero_oggi_21_dicembre_2019-4939335.html.

.

(63) In a report to the Italian Parliament of 3 March 2020, the extraordinary administration commissioner, Mr Leogrande, explained the economic and financial performance of the administration in 2019 as compared to 2018 by pointing to the fact that, notwithstanding increased operating traffic revenues (+ 2 %) and slightly reduced operating costs (– 1,3 %), Alitalia still suffered from an increase in costs (fuel and technical equipment, traffic and stopover, maintenance, audit and staff costs) and showed a balance of EUR 586 million, with an improvement of EUR 86 million, also thanks to the new government loan of December 2019 amounting to EUR 400 million

Relazione recante i dati aggiornati al 31 dicembre 2019 relativi alla situazione economico-finanziaria delle società Alitalia – Società Aerea Italiana S.p.A. e Alitalia Cityliner S.p.A., https://www.senato.it/service/PDF/PDFServer/BGT/1170672.pdf.

.

2.5.

The extraordinary administration procedure under which Alitalia was placed in May 2017

(64) In May 2017, the Italian Ministry of Economic Development placed Alitalia SAI and, several days afterwards, Cityliner under extraordinary administration

Pursuant to Decree-law 347/2003 read in conjunction with Legislative Decree 270/1999.

. Later the same month, the Court of Civitavecchia declared both Alitalia SAI and Cityliner insolvent.

(65) In their submission of 20 March 2019, the Italian authorities stated that, because of the admission of Alitalia to the extraordinary administration procedure, the private shareholders had been deprived of all the powers of management and supervision of Alitalia.

(66) Under the relevant Italian law, the management of Alitalia was entrusted to the extraordinary commissioners until the adoption by the Minister of Economic Development of an extraordinary administration programme (the EA programme), whereupon the commissioners would be authorised to sell Alitalia’s assets under the supervision of the Ministry of Economic Development.

(67) On 26 January 2018, Alitalia’s extraordinary commissioners provided to the Ministry of Economic Development a programme aiming at the sale of Alitalia's assets in operation

Under Article 4 of Decree-law 347/2003 in combination with Article 27(2), point a, and Article 54 et seq. of Legislative Decree 270/1999.

. In May 2019, the time limit for the completion of the asset sale programme was postponed to 23 March 2020.

(68) The sale procedure laid down by the authorised EA programme covered the assets relating to the business of Alitalia and also included the possibility to purchase the aircrafts owned by Alitalia SAI’s Irish subsidiaries.

2.5.1.

Extraordinary administration and special rules applying to very large companies

For more details see recitals 43 to 49 of Decision C(2021) 6659.

(69) Under Italian law (Legislative Decree 270/1999 and Decree-law No 347 of 23 December 2003

Decreto-legge 23 dicembre 2003, n. 347 – Misure urgenti per la ristrutturazione industriale di grandi imprese in stato di insolvenza (GU Serie Generale No 298, 24.12.2003) (Decree-law 347/2003).

), an extraordinary administration is an insolvency procedure for large companies aimed at rescuing them, preserving their value through the continuation of their activities until restructuring or sale of their assets, provided that it seems possible that they return to sufficient profitability.

(70) Under that procedure, previous shareholders are deprived of their decision-making powers, while the company continues operating. Management of the business and the administration of the company’s assets are taken over by the extraordinary commissioners appointed by the insolvency court.

(71) When the extraordinary administration procedure takes effect, the debts incurred prior to the procedure are frozen and become subordinated to the debts incurred during the extraordinary administration as a result of the continuation of the business operation. The status of the debts incurred during the extraordinary administration as super senior is provided by an explicit provision of law.

(72) For very large companies, such as Alitalia, additional special rules apply. Specifically, very large companies may request to be placed under extraordinary administration even before a court decision. In that event the Ministry of Economic Development appoints and controls the extraordinary commissioners. In that case the extraordinary administration can last a maximum of 36 months. In addition, for companies operating essential public services, the extraordinary commissioners have the power to sell the business assets through a negotiated procedure, provided that the sale price agreed by the extraordinary commissioners with the buyer is not lower than the market value established by an independent expert’s report.

2.6.

Public statements by members of the Italian government

(73) On 28 November 2019, the Minister of Economic Development stated that Alitalia will not fail, I feel I can guarantee it

https://www.ilmessaggero.it/economia/news/alitalia_patuanelli_non_fallira_nazionalizzazione_non_negativa-4892078.html.

.

(74) On 17 December 2019 the same Minister was reported to have said that there are critical issues [concerning Alitalia] to be tackled in a serious way, starting from the fact that I do not take into consideration the idea of putting airplanes on the ground

http://www.rainews.it/dl/rainews/articoli/Alitalia-Leogrande-domani-entrero-in-azienda-non-faro-disastri-45f19058-ff0f-42d2-9532-5446204b197d.html?refresh_ce.

.

(75) On 24 December 2019, Alitalia’s extraordinary commissioner was reported to have said that there is a risk of interruption of the activity of Alitalia. The media referred to the preamble to Decree-law 137/2019, which stated that in order to avoid the risk of interruption of Alitalia’s operational activity, it was requested, as soon as possible, to grant the financing and pay it in full

See the Sole 24 Ore, https://www.ilsole24ore.com/art/alitalia-governo-versa-400-milioni-nuovo-prestito-lufthansa-camera-7-gennaio-ACWPNH8.

.

2.7.

The sales process of Alitalia and its extensions

(76) Article 1 of Decree-law 55/2017, which granted the 2017 loans, provided that, in order to draw up the EA programme, the extraordinary commissioners had to explore the possibility of selling by way of tender Alitalia’s business activities within a certain time limit.

(77) Hence, in August 2017 the extraordinary commissioners organised a tender process to sell the assets of the companies in extraordinary administration (Alitalia SAI and Cityliner) as operating units.

(78) However, the tender was unsuccessful

As reported at page 133 of the EA programme, no offer submitted (among others, by Lufthansa, EasyJet and Airport Handling S.p.A.) complied with the procedural rules. In particular, according to page 17 of the extraordinary commissioners’ presentation at a hearing before the joint IX and X Committees of the Chamber of Deputies on 27 March 2019, those offers lacked binding elements and essential elements (bid bond, contractual documents or industrial plan).

and in December 2017 the extraordinary commissioners opened a new negotiated procedure

The possibility to have a negotiated procedure is provided for by Article 4(4-quarter) of Decree-law 347/2003, as an alternative to a call for tender. The negotiated procedure must be carried out without prejudice to compliance with the principles of transparency and non-discrimination.

to sell Alitalia’s assets. In that procedure only the offer of the Italian rail company Ferrovie dello Stato was deemed valid, whilst the other offers were rejected on grounds of their incompleteness or non-binding nature

Footnote 33 and Section 4.2.2.3 of Decision C(2021) 6659, as well as recital 25 and footnote 9 of the present Decision.

.

(79) After the failure of the sales procedure, Decree-law 137/2019 established a new deadline for the sale of Alitalia’s assets, fixing it at 31 May 2020. However, according to Italy, on 26 March 2020 the sales process was suspended because of the COVID-19 outbreak.

(80) As part of the efforts to find a solution, on 9 October 2020, the Italian state launched a new state-owned company, ITA.

(81) On 10 September 2021, the Commission adopted Decision C(2021) 6665 finding that the transfer of certain assets, as described in that decision, if carried out in compliance with the commitments undertaken by Italy, would not lead to economic continuity between Alitalia SAI and ITA. In the same decision the Commission found that a capital injection of EUR 1,35 billion into ITA did not create an advantage for ITA and therefore did not constitute State aid.

(82) Following Decision C(2021) 6665, the Alitalia extraordinary administration tendered the Alitalia brand and, in mid-October 2021, awarded it to ITA. In parallel, the Alitalia extraordinary administration and ITA reached an agreement on the transfer of Alitalia’s aviation business, consisting of 52 aircraft, related slots and other assets

See Section 2.2.3.1 of Decision C(2021) 6665.

.

(83) By the end of 2022, the Alitalia extraordinary administration was expected to have also sold through tenders the Alitalia loyalty programme, as well as Alitalia’s maintenance and groundhandling businesses in compliance with the commitments undertaken by Italy

See Section 4.3 of Decision C(2021) 6665.

. While the groundhandling service in Fiumicino airport was awarded to Swissport in May 2022 and Alitalia’s maintenance business was acquired by Atitech in September 2022

https://www.swissport.com/en/news/press-release/2022/20220523_media-release_swissport-expands-to-italy-rome-_it and https://www.atitech.it/atitech-takes-over-alitalia-em-from-alitalia-in-as/.

, other activities, including Alitalia’s loyalty programme, are still under tendering procedure. Hence, in December 2022 the extraordinary administration procedure was prolonged to the end of 2023, in order to allow for the liquidation of those assets not yet sold (recitals 28 and 32).

2.8.

The complaints

(84) In their submissions concerning the 2019 loan the complainants argued that it constituted unlawful and incompatible State aid.

(85) The complainants argued that the 2019 loan constituted State aid since the Italian Government did not act as a market economy operator. Given Alitalia’s economic situation, which, despite the 2017 loans, had not improved and given its history, the complainants argued that the doubts already expressed by the Commission in the 2018 Opening Decision on the 2017 loans would apply a fortiori in respect of the 2019 loan

The complainant provides a copy of an interview of the Vice President of the European Investment Bank, published by Radiocor Economia on 26 September 2019, reporting that Alitalia has not the characteristics to be bankable yet.

. In particular, they argued that no market economy operator driven by concerns of profitability would have been willing to increase its credit exposure by providing such fresh financing without any guarantee of return on the investment.

(86) According to the complainants, the 2019 loan conferred an advantage on Alitalia, having a material impact on trade between Member States and distorting competition, as Alitalia was in competition with other EU airlines. In their opinion, the 2019 loan allowed the company to maintain operations despite its persistently unhealthy financial situation, preserving and even increasing its market share by increasing capacity and opening certain routes, allowing it to continue pricing more aggressively than it would be able to without the 2019 loan, causing severe damage to competitors operating on those routes without public subsidies.

(87) The complainants highlighted in particular that, despite the significant subsidies it has received, Alitalia had been unable to carry out any restructuring, failing to become profitable, decrease its costs or reduce its debts. They also submitted that there were no credible offers for Alitalia’s assets, thus putting into doubt the plans for their sale. In this regard, the complainants submittedthat the only offer came from Lufthansa but it was subject to among others significant restructuring of Alitalia in the form of reduced workforce and aircraft fleet and did not materialise.

(88) The complainants argued that the 2019 loan was incompatible with the internal market and that a number of the compatibility criteria, set out in the Rescue and Restructuring Guidelines, have not been met.

2.9.

Summary of the Opening Decision

(89) In the Opening Decision, the Commission provisionally concluded that the 2019 loan is separable from the 2017 loans and that it may constitute State aid within the meaning of Article 107(1) TFEU.

(90) Regarding the separability of the 2019 loan from the 2017 loans, the Commission pointed out that the legal acts whereby the 2019 loan was granted did not explicitly state that that was an increase of the previous loans, unlike what the legal act granting the second of the two 2017 loans stated. The Commission also considered that the two-year time period between the 2019 loan and the 2017 loans was significant and that the 2019 loan was not reasonably foreseeable when Alitalia was placed under extraordinary administration. Finally, the Commission considered that the 2019 loan’s maturity date was fixed to six months and that interest on it was payable, unlike the 2017 loans whose maturity date was prolonged until the sale of Alitalia’s assets and on which interest was no longer accruing. Based on those elements, the Commission provisionally concluded that the 2019 loan was separable from the 2017 loans.

(91) On the existence of aid, the Commission considered that the 2019 loan may have conferred an economic advantage on Alitalia for the purposes of Article 107(1) TFEU. The Commission provisionally concluded that the MEO test was not applicable to the 2019 loan, as Italy failed to submit any documentary evidence that it had carried out an assessment prior to granting the 2019 loan of the potential return on investment and likelihood of repayment of that loan.

(92) In any event, the Commission considered that if it was doubtful that a private operator would have provided the initial 2017 loans when Alitalia was expected to be sold by November 2017, a fortiori it was even more doubtful that such a lender would have provided any further loan in 2019 given that the sales process had failed in its entirety at the time when the Opening Decision was adopted.

(93) In relation to the compatibility of the aid, the Commission considered that Alitalia was a firm in difficulty within the meaning of the Rescue and Restructuring Guidelines and came to the provisional conclusion that there were serious doubts as to the compatibility of the 2019 loan with the internal market under Article 107(3), point (c), TFEU.

(94) In particular, the Commission had doubts on whether the one time, last time principle had been complied with given that before the 2019 loan Alitalia benefitted from rescue aid in 2017

Italy notified the 2017 loans subsequent to granting as rescue aid. However, the 2017 loans have not been repaid after six months or turned to restructuring aid by submitting a viable restructuring plan as required by the Rescue and Restructuring Guidelines.

through the 2017 loans.

(95) Furthermore, the Commission stated that Italy did not provide evidence that would allow the Commission to assess the proportionality of the 2019 loan viewed as rescue aid, nor could the Commission assess the loans as rescue aid in the absence of a rescue plan. The Commission also pointed out that Italy did not provide any evidence that would demonstrate that the conditions for approving a potential rescue aid were complied with.

1. COMMENTS FROM INTERESTED PARTIES

(96) Ryanair was the only third party that submitted comments on the Opening Decision (see recital 19).

(97) On the existence of aid, Ryanair submited that it generally agrees with the Commission’s assessment. Moreover, Ryanair indicated that, contrary to the requirements of the Rescue and Restructuring Guidelines, Italy did not pursue a well-defined objective of common interest. Furthermore, Ryanair explained that the EUR 400 million aid could not have been either rescue or restructuring aid given that in October 2019 Alitalia was already for more than two years in insolvency proceedings and there was no realistic prospect of restoring Alitalia’s long-term viability, given Alitalia’s record of more than a decade of losses with no sign of improvent after 2017. Ryanair further pointed out that Alitalia’s below the industry average load factor, its aging fleet which was a source of rising costs and its constant erosion of market share were evidence that the EUR 400 million aid provided by Italy in 2019 could not have been restructuring aid.

(98) Finally, Ryanair indicated that the EUR 400 million loan to Alitalia breached the one time, last time principle as there were attempts to restructure Alitalia in 2013 and 2015 where the transfer of shares and ownership, in which Poste Italiane was involved, may not have satisfied the market economy investor test, and also because in 2017 Alitalia had received aid from the Italian State though the 2017 loans.

1. INFORMATION PROVIDED BY ITALY

4.1.

Information provided by Italy before the Opening Decision

(99) Prior to the Opening Decision, Italy claimed that the compatibility of the 2019 loan should be assessed as part of the investigation initiated by the 2018 Opening Decision concerning the 2017 loans

Case SA.48171 on the alleged State aid in favour of Alitalia, see recital 20 and footnote 6 of the present Decision.

, but it provided no additional information allowing the Commission to assess the compatibility of the 2019 loan.

(100) On 6 January 2020, Italy responded to a number of points raised in the complaints, while at the same time accepting that the 2019 loan is a financial support in favour of Alitalia SAI and Cityliner.

(101) Italy explained that, in the absence of a definitive bid by Ferrovie dello Stato by the deadline of 21 November 2019, in view of the timeline laid down by the law to complete the transfer procedure, Alitalia did not have access to the financing provided for by Decree-law 124/2019, which was aimed at supporting the sale of Alitalia’s assets within such timeframe

See also the reply submitted by Italy on 27 March 2021, p. 10.

. Therefore, on 3 December 2019, Decree-law No 137/2019 entered into force repealing the legal basis for the disbursement of the 2019 loan and providing for the organisation of a new transfer procedure. In this regard, on 6 December 2019, Mr Giuseppe Leogrande was appointed as Special Administrator of Alitalia, replacing the previous college of three extraordinary commissioners.

(102) Italy claimed that the legal instrument that was the object of the complaints, namely Art. 54 of Decree-law 124/2019, had not been converted into law; the lack of conversion into law, therefore, rendered the provision void ab initio and the complaints groundless. Italy contended that the legal instrument underpinning the 2019 loan is Art. 1 of Decree-law 137/2019, the subject-matter of which differed from that of Decree-law 124/2019, in so far as the fresh financing provided therein was contingent on the return to long-term profitability through the sale of a restructured company. The complaints were therefore without object.

(103) Italy argued that the 2019 loan to Alitalia did not constitute unlawful aid. Contrary to the allegations of the complainants, the 2019 loan was based on Decree-law 137/2019, which had been in force since 3 December 2019, a date following both complaints, and its conditions were materially distinct from those previously laid down in the initial Decree-Law 124/2019. The 2019 loan constituted the prerequisite for the finalisation of a viable, coherent and far-reaching restructuring process aimed at restoring the long-term viability of the company, through the transfer of its business branches under market conditions.

(104) Italy contended that the 2019 loan was not unlawful aid but constituted an additional instalment of the aid notified in January 2018, representing therefore an extension of the 2017 loans; however, Italy did not provide additional information that would have allowed the Commission to assess the compatibility of the 2019 loan. According to Italy, the 2019 loan was therefore not subject to the standstill obligation under Article 108(3) TFEU. Accordingly, Italy argued that the 2019 loan should be examined in the ambit of the investigation initiated by the 2018 Opening Decision in Case SA.48171 on the two 2017 loans (of EUR 600 million and EUR 300 million). Italy further stated that the measures introduced by Decree-law No 137/2019 were fully consistent with the first loan of EUR 600 million and its extension by the second loan (of EUR 300 million). According to Italy, the 2019 loan was the third instalment of a single public support measure, whose legitimacy and compatibility with the single market are the same as the aid notified in 2018.

(105) Italy provided the first part of a technical study provided by the consulting firm PricewaterhouseCooper (PwC) related to the theoretical liquidation value of Alitalia on 2 May 2017

PwC study dated 5 December 2019.

.

4.2.

Italy’s submissions after the Opening Decision

(106) On 27 March 2021, Italy replied to the Commission letter of 8 March 2021 (see recital 16) providing additional information. In its submission, Italy reiterated that the 2019 loan was part of the aid measure provided to Alitalia in 2017 with the aim of avoiding interruption of the service provided by Alitalia and disruption in the Italian air transport. Specifically, the Italian authorities re-confirmed that they considered the 2019 loan to be a third tranche of a single loan, part of the 2017 loans to Alitalia. However, Italy did not provide any evidence demonstrating that the 2019 loan was a third tranche to the 2017 loans, nor that the granting of the 2019 loan was reasonably foreseeable in 2017 when the first and the second loans were granted.

(107) The Italian authorities also confirmed that the 2019 loan had not been repaid, no interest had been paid and the maturity date had been extended twice, most recently until 16 December 2021 (see recital 28).

(108) The Italian authorities claimed that the 2019 loan, disbursed in December 2019, was used to streamline Alitalia’s business, in particular by improving its flight schedule, network and the structure of its costs. According to the Italian authorities, that was reflected in Alitalia’s growth in terms of passengers and of revenues from sold tickets, and in an increase in EBIT by EUR 10,61 million year over year for the month of January 2020. The Italian authorities explained that that trend continued in February 2020 until the start of the COVID-19 outbreak in Italy in late February 2020. The Italian authorities explained that, as part of its efforts to streamline the business, in early 2020 Alitalia changed its fleet composition, renegotiated its IT (e.g. software maintenance) and fuel supply contracts and took other measures, all resulting in cost savings.

(109) To the question whether Italy carried out any assessment of the profitability and risks related to the repayment of the 2019 loan before granting it as well as to provide evidence in that regard, the Italian authorities replied that the 2019 loan had been granted in order to ensure the business continuity of the company, as well as taking into consideration the public service obligations, in order to avoid the interruption of both national and international flights. In that regard the Italian authorities explained that to the best of their knowledge, at the end of 2019, Alitalia had no access to alternative sources of finance at the same conditions as the 2019 loan.

(110) Furthermore, to the question whether Italy had carried out an ex post assessment of the profitability and risks related to the repayment of the 2017 loans and, if so, whether they had used that assessment to decide on whether to grant the 2019 loan, the Italian authorities explained that the profitability and risks related to the repayment of the 2017 loans were considered in the comprehensive assessment of the whole procedure and financial situation of the company. Despite the Commission request, the Italian authorities did not provide evidence of such assessment. They did however explain in this regard that Alitalia is in extraordinary administration and that repayment of such loans is governed by law.

(111) In the Italian authorities’ view there has been no change in Alitalia’s risk profile since the granting of the 2017 loans. The risk profile of the company remained characterised by Alitalia’s status as an insolvent company under extraordinary administration.

(112) Regarding the sale of Alitalia’s assets Italy stated that after the failure of the attempt to sell Alitalia’s assets to Ferrovie dello Stato (see recital 78), the Italian legislation set a new deadline for the disposal of Alitalia’s assets, fixed at 31 May 2020. The Italian authorities explained that, on 6 March 2020, a call for expression of interest in buying Alitalia’s assets was published. However, according to the Italian authorities, on 26 March 2020 the tender process was suspended because of the COVID-19 outbreak. In this regard the Italian authorities specified that in the period from December 2019 to February 2021, the extraordinary administration conducted negotiations with third parties for the sale and lease back of a number of narrow body aircraft, but, at the time of the submission of Italy’s comments, that process had not been finalised.

1. ASSESSMENT OF THE AID

5.1.

Existence of aid within the meaning of Article 107(1) TFEU

(113) For a measure to be qualified as State aid within the meaning of Article 107(1) TFEU, the following cumulative criteria must be met: (i) it must be granted by the State and through State resources; (ii) it must confer an advantage upon an undertaking; (iii) it must be selective, i.e. favour certain undertakings or the production of certain goods; (iv) it must distort or threaten to distort competition and it must affect trade between Member States.

5.1.1.

Notion of undertaking

(114) Alitalia SAI and Cityliner are private companies operating in the air transport sector established in Italy. They are undertakings for the purposes of Article 107(1) TFEU since they carry out economic activities by offering services on a market

Judgment of 16 June 1987, Commission v Italy, 118/85, ECLI:EU:C:1987:283, paragraph 7.

.

5.1.2.

State resources and imputability to the State

(115) As has been stated by the Court of Justice (Court)

Judgment of 16 May 2002, France v Commission (Stardust Marine), C-482/99, ECLI:EU:C:2002:294.

, for measures to be qualified as State aid within the meaning of Article 107(1) TFEU, (i) they have to derive from State resources, either directly or indirectly by an intermediary body acting by virtue of powers conferred on it; and (ii) they have to be imputable to the State

Judgment of 14 October 1987, Germany v Commission, 248/84, ECLI:EU:C:1987:437, paragraph 17.

.

(116) Since the 2019 loan results from acts of the Italian Government and Parliament, it is imputable to the Italian State (see recitals 2 and 7). In addition, the 2019 loan was financed from the State budget and was thus clearly granted through State resources (see recital 22).

5.1.3.

Selectivity

(117) To be considered State aid, a measure must be selective in that it favours only certain undertakings or the production of certain goods.

(118) The 2019 loan was granted to two companies, Alitalia SAI and its fully-owned subsidiary Cityliner, whose economic activities are complementary and integrated as part of the Alitalia Group. Thus, it was granted on an ad hoc basis to two corporate entities, part of the same group and undertaking, and was not available to other companies active in the Italian air transport sector in a comparable legal and factual situation, or in other sectors. No comparable companies were eligible for measures similar to those granted to Alitalia and thus no such companies received a comparable financing. The 2019 loan was therefore selective.

5.1.4.

Advantage

(119) An advantage, within the meaning of Article 107(1) TFEU, is any economic benefit that an undertaking could not have obtained under normal market conditions, that is to say in the absence of State intervention

Judgment of 11 July 1996, SFEI and Others, C-39/94, ECLI:EU:C:1996:285, paragraph 60; judgment of 29 April 1999, Spain v Commission, C-342/96, ECLI:EU:C:1999:210, paragraph 41.

.

(120) According to the case-law of the Union Courts, economic transactions carried out by public bodies do not confer an advantage on their counterpart, and therefore do not constitute State aid within the meaning of Article 107(1) TFEU, if they are carried out in line with normal market conditions

Judgment of 11 July 1996, SFEI and Others, C-39/94, ECLI:EU:C:1996:285, paragraphs 60 and 61.

. In order to determine whether a transaction has been carried out under those conditions, the Commission applies the MEO test. That test has been developed with regard to different economic transactions.

(121) However, it follows from the BP Chemicals judgement

Judgment of 15 September 1998, BP Chemicals Limited v Commission (BP Chemicals), T-11/95, ECLI:EU:T:1998:199, points 170 and 170.

that the mere fact that a public undertaking has already made capital injections into a subsidiary which are classed as aid does not automatically mean that a further capital injection cannot be classed as an investment which satisfies the private market economy investor test. Nevertheless, in a case such as the present one, which concerns three capital injections made by the same investor over a period of two years, the first two of which brought no return, the Commission must determine whether the third injection could reasonably be severed from the first two and classed, for the purposes of the private investor test, as an independent investment.

(122) In other words, where a new State measure is inseparable from previous State aid to the undertaking concerned the MEO test should not be applied separately to the new State aid measure but instead both measures should be considered together for the purpose of the application of the MEO test. It follows that, if the MEO test was held to be inapplicable to the previous State aid, it must be inapplicable to the new measure as well in as much as it is inseparable from the previous State aid.

(123) Therefore, the Commission will first examine the preliminary question whether the 2019 loan is separable from the 2017 loans in order to determine whether, in respect of the 2019 loan, the assessment on the existence of aid on a stand-alone basis should be conducted, including the assessment of the applicability of the MEO test. If the 2019 loan is separable and the MEO test is applicable, the Commission will apply the MEO test to the 2019 loan.

5.1.4.1.

Separability of the 2019 loan from the 2017 loans and applicability of the MEO test

(124) In the Opening Decision, the Commission provisionally concluded that the 2019 loan was separable from the 2017 loans (see recital 90). In case that the Commission confirms its provisional finding in the Opening Decision that the 2019 loan is separable from the 2017 loans, the 2019 loan will have to be assessed separately, including as regards the applicability and the application of the MEO test.

(125) In line with the Commission’s decisional practice, a series of State interventions which take place in relation to the same undertaking in a relatively short period of time are linked to each other or, were all planned or foreseeable at the time of the first intervention, may be assessed as one intervention. On the other hand, when the later intervention was a result of unforeseen events at the time of the earlier intervention, the two measures should normally be assessed separately

Commission Decision of 19 December 2012 in Case SA.35378 Financing of Berlin Brandenburg Airport, Germany (OJ C 36, 8.2.2013, p. 10), recitals 14 to 33.

.

(126) When assessing whether the 2017 loans and the 2019 loan constitute a single intervention, the Commission takes account of: (i) the chronology of the two sets of State loans in question; (ii) their purpose; (iii) the undertaking’s (financial and risk) situation at the time when the decision(s) to grant the 2017 loans and the subsequent 2019 loan were made

Judgment of 19 March 2013, Bouygues and Bouygues Télécom v Commission and Others, Joined Cases C-399/10 P and C-401/10 P, ECLI:EU:C:2013:175, paragraph 104; judgment of 13 September 2010, Greece and Others v Commission, Joined Cases T-415/05, T-416/05 and T-423/05, ECLI:EU:T:2010:386, paragraph 177; judgment of 15 September 1998, BP Chemicals v Commission, T-11/95, ECLI:EU:T:1998:199, paragraphs 170 and 171.

.

(127) Following the in-depth investigation, the Commission confirms the provisional finding in the Opening Decision that the 2019 loan, which is the object of the assessment in the present case, and the 2017 loans, which the Commission found to constitute state aid in its decision in Case SA.48171, should be considered, for the purpose of assessing applicability of the MEO test, to be a separable measure from the 2017 loans, as further explained in Section 6.2.

(128) In their submission to the Commission before the Opening Decision, the Italian authorities claimed that the 2019 loan was an additional instalment (see recital 104) and therefore an extension of the 2017 loans. The Italian authorities reiterated that position in their submissions after the Opening Decision (see recital 106), adding that the aim of the 2019 loan was the same as the aim of the 2017 loans, i.e. to avoid interruption of the service provided by Alitalia and disruption in the Italian air transport. Thus, the Italian authorities argued that the 2019 loan should be examined in the ambit of the investigation in Case SA.48171, in which the Commission found that the 2017 loans were incompatible with the internal market.

(129) Moeover, the Commission notes that paragraph 81 of the Commission Notice on the notion of State aid indicates also that […] On the other hand, when the later intervention was a result of unforeseen events at the time of the earlier intervention the two measures should normally be assessed separately (emphasis added).

(130) As the Commission stated in the Opening Decision, in Decree-law 148/2017, by which Italy granted an additional EUR 300 million loan (the second of the 2017 loans), it is explicitly stated this is an increase of the EUR 600 million (the first of the 2017 loans) State financing already granted in May 2017 up to EUR 900 million24. By contrast, Decree-law 124/2019, Decree-law 137/2019 or Law 2/2020 make no reference to any such link to the 2017 loans.

(131) As regards chronology, the Commission observes that, while the 2017 loans were granted six months apart, the 2019 loan was granted two years after the previous loan

The 2017 loans were granted on 2 May 2017 and 16 October 2017 respectively, while the 2019 loan was granted on 26 October 2019.

. The 2019 loan is thus separable from the 2017 loans since it became necessary only a considerable time after the 2017 loans and relates to the financing of costs that could not have reasonably been foreseen when Alitalia was placed initially under extraordinary administration25.

(132) Moreover, despite Italy’s claim that the 2019 loan was a third tranche of a single loan and, thus, part of the 2017 loans

Italy’s subsmissions of 6 January 2020 and 27 March 2021.

, Italy provided no evidence in that regard (see recitals 106 to 110). The Commission finds that there is no evidence in the file that the 2019 loan was foreseeable in May or October 2017, when respectively the first of the 2017 loans (equal to EUR 600 million) and the second of the 2017 loans (equal to EUR 300 million) were granted, nor that such loan was intended to support Alitalia as part of a single plan of either rescue or restructuring the air carrier started in 2017. Rather, the facts indicate that after the granting of the 2017 loans, Italy planned to streamline and sell Alitalia’s business and, only after that plan failed, did Italy decide to provide further liquidity to Alitalia (see recitals 76 to 79 and 101).

(133) Accordingly, the Commission considers that the 2019 loan is separable from the State support granted with the 2017 loans and that thus the 2019 loan and the 2017 loans constitute a separate measure for the purposes of this decision.

5.1.4.2.

Applicability of the market economy operator test

(134) The Commission will examine applicability of the MEO test on two grounds, assessing (i) whether the State acted as a public authority rather than as economic operator when granting the two State loans; and (ii) whether Italy submitted sufficient ex ante evidence showing that it acted as an economic operator.

5.1.4.2.1.

Italy acted as public authority and not as a market economy operator

(135) The Commission considers that the MEO test is not applicable in the present case. On the basis of all available evidence, Italy has acted in its capacity as public authority to keep Alitalia operating beyond December 2019 and until the sale of its assets. Alitalia was in extraordinary administration since May 2017 and was kept operational only due to the state financing through the 2017 loans and the 2019 loan.

(136) As a preliminary remark, the Commission recalls that the Court has considered that the applicability of the MEO test ultimately depends on a State having conferred, in its capacity as shareholder and not in its capacity as a public authority, an economic advantage to an undertaking

Judgment of 5 June 2012, Commission v EDF, C-124/10 P, ECLI:EU:C:2012:318, paragraphs 79 to 82 and 87.

. Interventions by the State which are intended to honour its obligations as a public authority cannot be compared to those of a private investor in a market economy

Judgment of 15 December 2009, EDF v Commission, T-156/04, ECLI:EU:T:2009:505, paragraph 228.

.

(137) In order to determine whether the 2019 loan granted by the State represents the exercise of State authority or whether it is the consequence of obligations that the State assumed as a shareholder, the Commission must examine not only the form of that loan but also (i) its nature and subject matter; (ii) the context in which it was taken; (iii) the objective pursued; and (iv) the rules to which the 2019 loan is subject.

(138) If the State’s intervention, having regard to its nature and object and taking into account the objective pursued, is not an investment that may be made by a private investor, it would constitute intervention by the State as a public authority, thus precluding application of the MEO test

See, to that effect, judgment in Commission v EDF, C-124/10 P, ECLI:EU:C:2012:318, paragraphs 30, 86 and 87.

.

5.1.4.2.1.1.

The nature and subject matter of the measure

(139) As described in Section 2.1, the measure in question consisted of a loan granted by Italy on 26 October 2019 (see recital 2).

5.1.4.2.1.2.

The context of the measure

(140) The overall context in which the 2019 loan was granted is described in Section 2.2. Specifically, from the outset, the State acted consistently and clearly in its capacity as public authority to save Alitalia from being liquidated, a fact also acknowledged in public statements by various government ministers (see Section 2.6 of this decision as well as Section 2.5 of Decision C(2021) 6659), and not as a shareholder investing in a company or as a creditor.

(141) Alitalia has been continuously and heavily loss-making since being acquired by CAI in 2008. Alitalia’s shareholders’ attempts to put Alitalia back on track through the Turnaround Plan failed because of workers’ rejection of that plan on 26 April 2017, which led to it being placed under extraordinary administration (see recital 29). Alitalia has continued to lose money while in extraordinary administration.

(142) After the rejection of the Turnaround Plan but prior to being placed under extraordinary administration, there is no evidence that any investor was willing to step in and acquire Alitalia as a going concern, even for a nominal price. Nor is there any evidence that financial institutions were ready to provide significant loan facilities to allow sufficient liquidity for it to keep operating (see recitals 227 et seq. of Decision C(2021) 6659).

(143) When the 2017 loans were granted, Alitalia SAI was an undertaking in difficulty within the meaning of the Rescue and Restructuring Guidelines and had little prospect of becoming profitable in the near to medium term (see recitals 41, 66 and 218 to 229 of Decision C(2021) 6659). This argument fully applies to Cityliner which was placed under extraordinary administration at the same time as Alitalia SAI (see recitals 1 and 29). There is no evidence in the case file that that situation would have changed.

(144) Furthermore, in October 2019, when the 2019 loan was granted, Alitalia’s found itself in a financial position was similar to the one in May and October 2017, when the 2017 loans were granted, i.e. Alitalia was again in need of a liquidity injection in order to keep in operation (see recitals 60 to 63).

5.1.4.2.1.3.

The objective pursued

(145) The express purpose of putting Alitalia under extraordinary administration was to ensure the continuity of transport services provided by Alitalia.

(146) As an insolvent company, Alitalia was, in essence, frozen out of the credit markets and, due to its immediate and longer-term liquidity problems, was dependent on the Italian State, which provided the 2017 loans. As described in detail in Section 2 of Decision C(2021) 6659, the first loan was granted with the principal aim of avoiding interruption of the service provided by Alitalia SAI and its subsidiaries, including Citilyner, allowing it to maintain domestic and international flight connections, thus preventing both social hardships and serious inconvenience for users. Italy also claimed that such an interruption would entail infringing, inter alia, the right to territorial continuity within Italy guaranteed by the Italian Constitution.

(147) Moreover, at the end of 2019 Alitalia continued to be in a difficult financial situation (see Section 2.4.2).

(148) Thus the additional 2019 loan was granted for the same reason as the 2017 loans, i.e. to ensure uninterrupted service, as well as to facilitate a restructuring and divestiture of Alitalia’s assets (see recitals 2 and 7 and Section 2.1). The objective pursued by the 2019 loan was accordingly in line with the objective pursued by the placing of Alitalia under extraordinary administration.

(149) That conclusion is further supported by the public declarations of government ministers before the initial loan was granted (see Section 2.6), namely that the government’s main concern was to prevent the sudden interruption of air transport services. Furthermore, the relevant legislation granting the 2019 loan stated that the extraordinary administration was to take into account the employment levels and the operational unity of the business activities of Alitalia.

(150) Having examined the above elements (recitals 145 to 149), the Commission considers that the main purpose of the 2019 loan was to ensure that Alitalia kept operating for reasons of public policy rather than the financial interests of the State as a market economy operator. As such, any prospect that the State would make profit from the 2019 loan, even in the long term, if that could be demonstrated, was merely incidental to the decision to grant the 2019 loan.

(151) Furthermore, the Court has held that ensuring the continuity of transport services provided by an undertaking is a consideration which a private investor would not take into account

Judgment of 19 December 2019, Arriva Italia and others, C-385/18, ECLI:EU:C:2019:1121, paragraph 73.

.

(152) In addition, given that there is no evidence in the case file that the 2019 loan was repaid, it can be inferred that the maturity date of the 2019 loan was postponed or the debt was, de jure or de facto, cancelled. Given Alitalia’s persistent financial difficulties after October 2017 and absent any proof to the contrary, it appears that the State as a lender never received remuneration for either its liquidity cost or the credit risk related to Alitalia. Moreover, Italy did not submit any ex ante study showing that the State had a financial interest to grant the 2019 loan or to prolong the repayment. That behaviour, namely granting the 2019 loan without a specific ex ante study of profitability of the loan and absent any evidence that Italy tried to recover the loan, is not in line with that of a MEO but demonstrates the interest of a public authority to maintain the continuity of transport service provided by Alitalia, as plainly reiterated by the Italian authorities

See, inter alia, the Parliament’s debate regarding the conversion of the Government’s Decree n. 137/2019 into Law, https://www.camera.it/leg18/126?tab=6&leg=18&idDocumento=2284&sede=&tipo=.

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5.1.4.2.1.4.

The rules to which the measure is subject

(153) The 2019 loan at issue is sui generis and ad hoc. Specific Decree-laws were adopted to provide for the grant of the loan (see recitals 2 and 3). It was financed from the State budget (see recital 22). Furthermore, specific Ministerial Decrees provided for the disbursement of those loan.

(154) The money for the loan accordingly came from the general State budget and not from a separate reserve, e.g. a State-owned investment fund operating on a commercial basis.

(155) In conclusion, it must be noted that the measure presents, in view of its nature and subject matter, the context in which it was taken, its objective and the rules to which it is subject, the characteristics of an act taken by Italy in its capacity as a public authority. Consequently, the private investor test cannot be applied to the 2019 loan.

5.1.4.2.2.

Lack of a MEO reasoning by Italy

(156) The Court has held that the applicability of the private investor test ultimately depends […] on the Member State concerned having conferred, in its capacity as shareholder and not in its capacity as public authority, an economic advantage on an undertaking belonging to it

Judgment of 5 June 2012, Commission v EDF, C-124/10 P, ECLI:EU:C:2012:318, paragraph 81.

.

(157) Where a Member State relies on the MEO test during the administrative procedure, that Member State [m]ust establish unequivocally and on the basis of objective, verifiable and contemporaneous evidence that the measure implemented falls to be ascribed to the State acting as shareholder and is based on the requisite prior economic evaluations

Judgments of 16 January 2018, EDF v Commission, T-747/15, ECLI:EU:T:2018, paragraph 142 and of 19 December 2019, Arriva Italia and others, C-385/18, ECLI:EU:C:2019:1121, paragraph 48.

. That evidence must show clearly that the Member State concerned took the decision to make an investment before or at the same time as conferring the economic advantage based on a reasoned assessment demonstrating a market rate of return as a result of the measure actually implemented in the public undertaking.

(158) Furthermore, only the benefits and obligations linked to the situation of the State as a shareholder, to the exclusion of those linked to its situation as a public authority, can be taken into account to assess whether the same measure would have been adopted in normal market conditions by a private investor in a situation as similar as possible to that of the State

Judgments of 19 December 2019, Arriva Italia and others, C-385/18, ECLI:EU:C:2019:1121, paragraph 47 and of 5 June 2012, Commission v EDF, C-124/10 P, ECLI:EU:C:2012:318, paragraph 79 and the case-law cited.

. As a consequence, the roles of the State as a shareholder of an undertaking and as a public authority must be distinguished.

(159) In that regard, it may be necessary to produce evidence showing that the decision is based on economic evaluations comparable to those which, in the circumstances, a rational private investor in a situation as close as possible to that of the Member State would have carried out, before making the investment, in order to determine its future profitability.

(160) As recalled by the General Court

Judgment of 25 June 2015, SACE and Sace BT v Commission, T-305/13, ECLI:EU:T:2015:435, paragraph 184 .

, whilst it is for the Commission to apply the private investor test and to request the Member State concerned to provide it with all relevant information to that end, it is the responsibility of that Member State or […] the public undertaking concerned to provide evidence showing that it conducted a prior economic evaluation of the profitability of the measure in question, comparable to that which a private investor would have had carried out in a similar situation.

(161) In order to show that, before or at the same time as conferring the advantage, the Member State took that decision as a shareholder, it is not enough to rely on economic evaluations made after the advantage was conferred, on a retrospective finding that the investment made by the Member State concerned was actually profitable, or on subsequent justifications of the course of action actually chosen

Judgment of 5 June 2012, Commission v EDF, C-124/10 P, ECLI:EU:C:2012:318, paragraph 85.

.

(162) Italy has failed to meet the minimal evidentiary standard for demonstrating that the MEO test is applicable in the present case.

(163) As noted in recital 91, despite the Commission’s requests for information and comments on the Opening Decision, Italy failed to submit any documentary evidence that it had carried out an assessment prior to granting the 2019 loan of the potential return on investment of that loan. Nor did it submit its assessment of the likelihood of the repayment of the principal together with the associated interest from Alitalia’s own resources or from the sales proceeds of Alitalia itself, and of the risk of non-repayment.

(164) Furthermore, the Italian authorities were not able to prove the existence of a document, drawn up before or contemporaneously to the decision to grant the 2019 loan, which would constitute a business plan, a profitability assessment consisting notably of an economic assessment covering likelihood of repayment and appropriateness of pricing of the two State loans. There is no indication that the Italian administration, government, or members of parliament examined and discussed a business plan or the profitability of the 2019 loan before adopting the administrative and legislative provisions granting the 2019 loan (Section 4.2).

(165) To that effect, when the Commission asked specifically whether Italy had carried out any assessment of the profitability and risks related to the repayment of the 2019 loan before granting it, the Italian authorities replied that the 2019 loan had been granted in order to ensure the business continuity of the company, as well as taking into consideration the public service obligations, in order to avoid the interruption of both national and international flights (see recital 109). That answer not only confirms that Italy had not carried out an assessment of the profitability and risks related to the repayment of the 2019 loan, but it can also be seen as a direct admission that in providing the 2019 loan Italy was not acting as a private lender but rather was pursuing public policy goals.

(166) Moreover, the lack of assessment of the profitability and risks associated with the 2019 loan is corroborated by the Italian authorities’ statements concerning an ex post assessment of the profitability and risks of the 2017 loans and whether that assessment was used in making the decision to grant the 2019 loan. The explanation provided by the Italian authorities in that regard is that Alitalia is in extraordinary administration and that repayment of such loans are ruled by law (see recital 110). That explanation and the lack of provision of documents demonstrating that an assessment of profitability was made suggest that the Italian authorities did not consider likely that the loan would be repaid and that they did not deem it necessary to assess its profitability and risks.

(167) It follows that Italy has failed to meet the standard of proof requiring the Member State to show, unequivocally and on the basis of objective and verifiable evidence established before or at the same time as the decision to confer the economic advantage, that the measure falls to be ascribed to the State acting as a market operator and, thus, to discharge the evidentiary burden on it for the MEO test to be applicable.

5.1.4.3.

Application of the market economy operator test

(168) Without prejudice to the assessment in Section 5.1.4.2, in which the Commission concludes that the MEO test is not applicable, the Commission considers, by way of a subsidiary line of reasoning, that even if the MEO test were applicable, quod non, the 2019 loan conferred an economic advantage to Alitalia. Therefore, in this section, the Commission will apply the MEO test to the 2019 loan.

(169) In applying the MEO test, the Commission acknowledges that the following facts would be known to a MEO on 26 October 2019, i.e. at the time of granting of the 2019 loan:

(a) the extraordinary commissioners had already decided to sell Alitalia (see recitals 30 to 32) instead of restructuring it into a viable in the long term undertaking

The extraordinary administration took certain measures to improve the efficiency of Alitalia, however those did not amount to a restructuring plan.

;

(b) the extraordinary commissioners had received offers for the parts of Alitalia on sale (Section 4.2.2.3), which did not result in the actual sale of the company;

(c) the deadline for the conclusion of the sale procedure, which was initially 5 November 2017, the same as the maturity date of the initial loan, was extended and subsequently accrual of interest was stopped (recital 31);

(d) Alitalia did not repay the 2017 loans, nor the accrued interest (see recitals 26 and 30);

(e) Alitalia had only EUR 310 million of cash on 30 September 2019 (see Table 2).

(170) In line with the Court’s case-law

See, for instance, judgment of 24 October 2013, Land Burgenland and others v Commission, C-214/12 P, C-15/12 P and C-223/12 P, ECLI:EU:C:2013:682.

, the assessment of the Commission disregards the benefits and obligations originating from the 2017 loans. Since the 2017 loans constitute aid, the corresponding benefits and obligations refer to the State as a public authority rather than as a MEO.

(171) Therefore, the Commission takes into consideration what the financial situation of Alitalia would have been in the lack of the 2017 loans of a total of EUR 900 million. In that scenario, Alitalia would have had a negative cash position of EUR 590 million on 30 September 2019

The negative EUR 590 million cash position is the result of subtracting the EUR 900 million of the 2017 loans from the total available cash on 30 September 2019, i.e. EUR 310 million.

. Presumably, Alitalia’s cash position would have been even worse on 26 October 2019, as the company was loss-making

Alitalia made a net negative EUR 49 milllion EBITA for the period 1Q 2018 till 3Q 2019.

. Since a company can operate only if cash inflows are greater than the outflows so that it has a positive and sufficient cash balance, the Commission considers that the bankruptcy of Alitalia is a reasonable scenario without the initial loan.

(172) Since Alitalia would have been bankrupt without the 2017 loans, it would no longer have been a going concern at the time of granting the 2019 loan and, therefore, no market economy lender would have contemplated granting the 2019 loan at that time. Therefore, the Commission concludes that the MEO test cannot be applied to the 2019 loan.

Conclusion on the existence of an advantage

(173) In conclusion, the Commission finds that the MEO test is not applicable to the 2019 loan granted to Alitalia. For completeness, the Commission notes that even if applied, such test would not be met at any rate, given that without the 2017 loans Alitalia would have been bankrupt in any event, as explained above (recitals 171 and 172). Consequently, the Commission concludes that the Italian State granted an advantage to Alitalia equal to the nominal amount of the 2019 loan, i.e. EUR 400 million.

Distortion of competition and impact on trade between Member States

(174) According to Article 107(1) TFEU, to constitute State aid a measure must distort or threaten to distort competition and have an effect on intra-Union trade

Judgment of 30 April 1998, Het Vlaamse Gewest v Commission, T-214/95, ECLI:EU:T:1998:77.

.

(175) A measure granted by the State is considered to distort or threaten to distort competition when it is liable to improve the competitive position of the recipient compared to other undertakings with which it competes. It is therefore sufficient that the aid allows the recipient to maintain a stronger competitive position than it would have had if the aid had not been provided.

(176) According to the extraordinary administration Commissioners, at the time of the measure Alitalia was the main Italian airline. In particular, in 2017 Alitalia had a market share of 12,6 % of the total passenger traffic from and to Italy and during the first 10 months of 2017 carried about 18,5 million passengers (16,3 million by Alitalia SAI and 2,2 million by Cityliner), of which 55 % on domestic routes, 32 % on international routes and 13 % on intercontinental routes. The extraordinary administration commissioner’s trimestral report for the period January–March 2021, published on 22 March 2022

Relazione Trimestrale ex art. 61, 2° comma, D. Lgs. N. 270/1999 della procedura di amministrazione straordinaria relativa alle società Alitalia SAI S.p.A. in Amministrazione Straordinaria Alitalia CityLiner S.p.A. in Amministrazione Straordinaria, published on 22.3.2022, p. 16, https://cdn.fallcoweb.it/sito_procedura/pdf/alitalia/rel_31032021.pdf.

, described the Italian air passenger transport market as highly competitive and characterised by, inter alia, a high penetration of low-cost carriers on the domestic market (the

highest in Europe) and on the intra-European market. In 2019, Alitalia’s market shares decreased to 37 % of total passengers on domestic flights, where low-cost carriers held an aggregated market share of 57 % (Ryanair 35 %, Easyjet 11 % and Volotea 8 %), and accounted for approximately 7 % of the total passenger traffic in medium–long haul flights

ENAC and Eurocontrol data, https://www.enac.gov.it/pubblicazioni/dati-di-traffico-2019.

. In 2020, Alitalia’s market share on domestic flights again decreased (around 35 % of the total passengers, equal to Ryanair’s market share), while, in terms of traffic from and to Italy, Alitalia represented around 7,7 % of the total passengers

ENAC data, https://www.enac.gov.it/news/dati-di-traffico-2020. The EA Commissioners reported that Alitalia nevertheless increased its passenger market share in the flights to/from Italy from 15,9 % of Q1 2020 to 28,5 % of Q1 2021, due also to the increase in the number of seats offered (+ 3,1 %), https://cdn.fallcoweb.it/sito_procedura/pdf/alitalia/rel_31032021.pdf.

and Ryanair was the first carrier, with a 28 % market share; other eight carriers flanked Ryanair and Alitalia, with market shares between 1 % and 2 %, for a total of 10,2 %; finally, another 228 operators, with a share of less than 1 % each, represented the remaining 21,9 % of the traffic from and to Italy

ENAC data, https://temi.camera.it/leg18/post/OCD15_14420/enac-i-dati-traffico-aereo-2020.html.

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(177) The Commission considers that the 2019 loan affects trade between Member States, as it concerns Alitalia, a company whose transport activity, by its very nature, directly concerns trade and covers several Member States as shown in rectial 176. It also distorts or threatens to distort competition within the internal market, as it only concerns one undertaking, which is in competition with other airlines on its European network.

Conclusion on the existence of aid

(178) Therefore, the Commission concludes that the 2019 loan involves aid under Article 107(1) TFEU, and the Commission will therefore assess its lawfulness and compatibility with the internal market. The direct beneficiaries of the aid is Alitalia SAI and Cityliner.

5.2.

Lawfulness of the aid

(179) The Commission notes that the 2019 loan was granted to Alitalia (Alitalia SAI and Cityliner) before notification to the Commission. Thus, the 2019 loan was granted in breach of Article 108(3) TFEU and the standstill obligations laid down therein.

(180) Therefore, since the 2019 loan has been found to constitute aid within the meaning of Article 107(1) TFEU, the Commission concludes that it constitutes unlawful State aid.

1. COMPATIBILITY OF THE AID

6.1.

Existence of aid within the meaning of Article 107(1) TFEU

(181) Insofar as the 2019 loan constitutes State aid within the meaning of Article 107(1) TFEU, the Commission must assess whether that aid can be declared compatible with the internal market.

(182) State aid is deemed to be compatible with the internal market if it falls within any of the grounds listed in Article 107(2) TFEU or Article 107(3) TFUE.

(183) According to the Court’s settled case-law, a Member State which seeks to be allowed to grant aid by way of derogation from the Treaty rules has a duty to collaborate with the Commission.

(184) In pursuance of that duty, it must in particular provide all the information to enable the Commission to verify that the conditions for the derogation sought are fulfilled

Judgment of 28 April 1993, Italy v Commission, C-364/90, ECLI:EU:C:1993:157, paragraph 20.

.

(185) To the extent that Italy claims that the 2019 loan was an instalment of the 2017 loans (recital 106), the Commission’s assessment in Section 6 of Decision C(2021) 6659 applies mutatis mutandis to the 2019 loan, as illustrated in Section 6.2 below.

6.2.

Assessment under Article 107(3), point (c), TFEU and in particular under the Rescue and Restructuring Guidelines

(186) Italy considers the 2019 loan as a continuation of the 2017 loans (recitals 104 to 112) and therefore the Commission considers it necessary to assess whether it would be a form of rescue aid in the meaning of the Rescue and Restructuring Guidelines.

(187) On the basis of Article 107(3), point (c), TFEU, the Commission may consider compatible with the internal market State aid to facilitate the development of certain economic activities or of certin economic area within the European Union, where such aid does not adversely affect trading conditions to an extent contrary to the common interest.

(188) Similarly to Decision C(2021) 6659

See recital 363 of Decision C(2021) 6659.

, the Commission finds that Alitalia qualifies as undertaking in difficulty pursuant to point 20(c) of the Rescue and Restructuring Guidelines, as it was declared insolvent at the material time (see recitals 64 and 143). Consequently, the only ground for assessing the compatibility of the aid is rescue and restructuring aid based on the Rescue and Restructuring Guidelines. Two types of aid defined by those Guidelines are relevant here, namely rescue aid and restructuring aid.

(189) In order to be compatible with the internal market under those Guidelines, an aid should comply with the rules and conditions set forth in those Guidelines for the purposes of the compatibility assessment of rescue and restructuring aid pursuant to Article 107(3), point (c), TFEU.

(190) To that effect, Italy has not provided any elements demonstrating that the 2019 loan satisfies any of the conditions for either a rescue or a restructuring aid to be compatible with the internal market pursuant to the criteria set out in the Rescue and Restructuring Guidelines (recitals 107 to 114 of the Opening Decision). Accordingly, as stated in point 39 of the Rescue and Restructuring Guidelines, the failure to meet any of the criteria signifies that the aid cannot be deemed compatible.

(191) Furthermore, given that Alitalia benefitted from previous aid through the 2017 loans, even if incompatible, as ascertained by the Commission in Section 6 of Decision C(2021) 6659, pursuant to points 72 and 73 of the Rescue and Restructuring Guidelines, according to which rescue aid should be granted only once (one time, last time condition), any subsequent loan would be incompatible unless it is provided after 10 years have elapsed since the rescue aid was granted (recitals 117 and 118 of the Opening Decision).

(192) The 2019 loan is, therefore, incompatible, as Italy not only had already granted two loans to Alitalia in 2017, but also never submitted a restructuring plan for the 2019 loan to Alitalia. As illustrated in recitals 376 and 377 of Decision C(2021) 6659 with regard to the 2017 loans, where also no restructuring plan was submitted by Italy, the EA programme cannot be considered as a feasible, coherent and far-reaching restructuring plan to restore Alitalia’s long-term viability within the meaning of Section 3.1.2 of the Rescue and Restructuring Guidelines. In fact, such programme aimed at keeping the company afloat while the sale of its assets was ongoing (recitals 76 to 83), whilst no financial or economic measures were envisaged by the extraordinary commissioners in 2019 to reorganise or rationalise Alitalia’s business, nor an industrial project developed to make it competitive and viable again (recitals 60 to 62 and 67 to 68).

(193) Therefore, and also given the fact that Italy never presented any other argument or elements as a possible legal ground of compatibility for the 2019 loan granted to Alitalia in 2019, the Commission concludes that the said State loan is incompatible with the internal market.

1. CONCLUSION

(194) The Commission finds that Italy has unlawfully implemented an aid measure in the form of a EUR 400 million loan (the 2019 loan), granted in favour of Alitalia (Alitalia SAI and Cityliner), in breach of Article 108(3) TFEU.

(195) Since no grounds can be identified for finding the measure to be compatible with the internal market, it must be held to be incompatible with the internal market.

1. RECOVERY

(196) According to the TFEU and the established case-law of the Union Courts, the Commission is competent to decide that the Member State concerned shall alter or abolish aid when it has found that that aid is incompatible with the internal market

Judgment of 12 July 1973, Commission v Germany, 70/72, ECLI:EU:C:1973:87, paragraph 13.

. The Union Courts have also consistently held that the obligation on a Member State to abolish aid regarded by the Commission as being incompatible with the internal market is designed to re-establish the previously existing situation

Judgment of 21 March 1990, Belgium v Commission, C-142/87, ECLI:EU:C:1990:125, paragraph 66.

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(197) In that context, the Union Courts have established that the said objective is attained once the recipient has repaid the amounts granted by way of unlawful and incompatible aid, thus forfeiting the advantage which it had enjoyed over its competitors on the internal market, and the situation prior to the payment of the aid is restored

Judgment of 17 June 1999, Belgium v Commission, C-75/97, ECLI:EU:C:1999:311, paragraphs 64 and 65.

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(198) In line with the case-law, Article 16(1) of Council Regulation (EU) No 2015/1589

Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ L 248, 24.9.2015, p. 9).

states that where negative decisions are taken in cases of unlawful aid, the Commission shall decide that the Member State concerned shall take all necessary measures to recover the aid from the beneficiary.

(199) Thus, since the 2019 loan in question was implemented in breach of Article 108(3) TFEU, and is to be considered as unlawful and incompatible aid, it should be recovered in order to re-establish the situation that existed in the internal market prior to its granting. Recovery should cover the time period from the date when the aid was put at the disposal of the beneficiaries until effective recovery. The amount to be recovered should bear interest until effective recovery.

(200) The amount of the 2019 loan that qualifies as an advantage granted can be quantified at this stage at EUR 400000000. Italy will have to calculate the recovery interest accruing from the dates at which the aid was disbursed to Alitalia and until full repayment of the aid principal. The interest should be calculated on a compound basis in accordance with Chapter V of Commission Regulation (EC) No 794/2004

Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty (OJ L 140, 30.4.2004, p. 1).

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(201) The obligation to repay the aid and the applicable recovery interest, calculated according to the methodology described in recital 200, arises irrespective of any additional interest that Italy may have to claim from Alitalia based on national law or on contracts between Alitalia and Italy. However, Italy may not raise any clause or provision contained in the national law or in contracts with the beneficiaries to delay the recovery beyond four months from the notification of this Decision or to reduce the amount to be recovered, which has to include the aid principal of EUR 400000000 plus the applicable recovery interest.

(202) Finally, the Commission notes that Alitalia (Alitalia SAI and Cityliner, the direct beneficiaries of the aid principal as established) may form an economic unit with the other companies in the Alitalia Group due to control exercised by Alitalia SAI over the subsidiaries, including Cityliner (recitals 51 to 52, as well as Chart 1), for the purpose of the application of State aid rules. The Commission considers that Italy should, in the first place, recover the unlawful and incompatible aid granted to the Alitalia Group from Alitalia. Should it not be possible to recover the full amount of the aid from Alitalia, Italy should recover any outstanding amount from any other separate legal entity that forms part of the Alitalia Group and constitutes a single economic unit with Alitalia, so as to ensure that the advantage granted is eliminated and the situation previously existing on the market is restored through the recovery,

HAS ADOPTED THIS DECISION:

Article 1

1. The measure consisting of a EUR 400 million loan granted by Italy on 26 October 2019 in favour of Alitalia – Società Aerea Italiana S.p.A. and Alitalia Cityliner S.p.A., both in extraordinary administration, constitutes State aid within the meaning of Article 107(1) TFEU.

1. The aid referred to in paragraph 1 has been unlawfully put into effect by Italy in breach of Article 108(3) TFEU.

1. The aid referred to in paragraph 1 is incompatible with the internal market.

Article 2

1. Italy shall recover the aid referred to in Article 1 from the beneficiaries.

1. The sums to be recovered shall bear interest from the date on which they were put at the disposal of the beneficiaries until their actual recovery.

1. The interest referred to in paragraph 2 shall be calculated on a compound basis in accordance with Chapter V of Regulation (EC) No 794/2004.

Article 3

1. Recovery of the aid referred to in Article 1 shall be immediate and effective.

1. Italy shall ensure that this Decision is implemented within four months following the date of its notification.

Article 4

1. Within two months following notification of this Decision, Italy shall submit the following information:

(a) the total amount (principal and recovery interest) to be recovered from the beneficiaries;

(b) a detailed description of the measures already taken or planned to comply with this Decision;

(c) documents demonstrating that the beneficiaries have been ordered to repay the aid.

1. Italy shall keep the Commission informed of the progress of the national measures taken to implement this Decision until recovery of the aid referred to in Article 1 has been completed. It shall immediately submit, on simple request by the Commission, information on the measures already taken or planned to comply with this Decision. It shall also provide detailed information concerning the amounts of aid and recovery interest already recovered from the beneficiaries.

Article 5

This Decision is addressed to the Italian Republic.

Done at Brussels, 27 March 2023.

For the Commission

Margrethe Vestager

Member of the Commission