Barrot takes aim at Alitalia rescue plan

Date: 02/06/05

The European Commission is expected to decide on a widely criticised rescue plan for Italian national airline Alitalia on 7 June.

Italy wants to recapitalise Alitalia's new flight unit, AZ Fly, with €1.2 billion while transferring the airline's €1.6bn debt to the ground services unit AZ Servizi. Talks are still under way about selling part of Servizi to Italian state-owned holding company Fintecna.

Alitalia has not made an operating profit since 1998 and the proposed bail-out of the troubled carrier has raised howls of protest from traditional and low-fare airlines. The European Low Fares Airline Association (ELFAA) said the package broke the one-time last-time rule for state aid. "Would any normal investor pump money into Alitalia to save it? I

think the answer is no," said ELFAA Secretary-General Jan Skeels.

"It will be very hard for the Commission to refuse similar action from other states to other national airlines," Skeels said.

The Commission opened an in-depth investigation into the aid package in January. Transport Commissioner Jacques Barrot said he wanted to clarify how Italy planned to use bank guarantees.

A guaranteed bridging loan of €400 million was cleared by the EU executive in July 2004.

Article reports that the European Commission was expected to decide on a widely criticised rescue plan for Italian national airline Alitalia on 7 June 2005.