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European Commission

Conditional go-ahead for the recapitalisation of Alitalia

The European Commission today found that the recapitalisations of Alitalia and its services subsidiary do not involve any State aid provided that the conditions laid down to ensure that the State…

The European Commission today found that the recapitalisations of Alitalia and its services subsidiary do not involve any State aid provided that the conditions laid down to ensure that the State behaves like a prudent investor are strictly complied with. On the one hand, the State`s minority participation in the future EUR 1.2 billion increase in the capital of AZ Fly must take place at the same price and under the same conditions as private investors. On the other, the proposed investment of EUR 216 million by the public holding company Fintecna in the ground activities of AZ Services must comply with market conditions. In addition, the Commission found that the conditions which it laid down concerning the rescue aid authorised in 2004 have been complied with. Jacques Barrot, Vice-President with responsibility for transport, said that on the basis of a thorough and detailed analysis the Commission has concluded that these recapitalisations do not involve any State aid. This would have been prohibited by the one time, last time principle which we scrupulously uphold.



With regard to the EUR 1.2 billion recapitalisation of Alitalia (AZ Fly), the Commission obtained a letter of intent from the international bank Deutsche Bank, which guarantees the effective and majority involvement of the private sector in this operation. This will ensure compliance with the undertaking given by Italy in July 2004 to privatise the business.



The conditions of the guarantee were regarded as being in accordance with market practices. The State`s commitment to be involved in the recapitalisation only once a formal and unconditional guarantee had been obtained from Deutsche Bank concerning the operation and under the same conditions as private investors rules out the incidence of State aid.



AZ Services, which is responsible for Alitalia`s maintenance, groundhandling and shared services activities, will be recapitalised by Fintecna to the extent of EUR 216 million. The Commission has verified, by means of an independent investigation, that this investment offers a return consistent with what a private investor would expect.



When investigating the restructuring, the Commission gave third parties the possibility of commenting on how Alitalia had used the loan of EUR 400 million which it authorised Italy to guarantee on 20 July 2004. In the light of these comments, the Commission carried out a full analysis of Alitalia`s behaviour, including an independent examination. It took the view that no misuse of this aid had taken place; and that, in particular, the company`s capacity complies with the commitments made and the new routes are profitable. The Commission also notes that the Italian authorities have undertaken to repay this loan in advance, as soon as the recapitalisation of AZ Fly has been concluded and in any event before 31 December 2005. It will continue to ensure that all the conditions imposed on the Italian authorities are complied with.

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