Airlines take Alitalia complaint to Brussels

Listen to this article

00:00
00:00

Eight European airlines including British Airways, Germany's Lufthansa and Iberia of Spain, have attacked the planned rescue of Alitalia, the majority state-owned Italian carrier.

The airlines said in a letter to the European Commission that the restructuring of Alitalia appeared to be planned “to violate or circumvent EC state aid rules”.

Further aid to Alitalia would “severely hinder the much-needed consolidation of the European airline industry” and constituted “a major distortion of competition” said the letter, also been signed by Austrian Airlines, SAS Scandinavian Airlines, Finnair, TAP Air Portugal and Hapag-Lloyd Flug, part of the Tui travel group of Germany.

The Commission should be particularly critical of a rescue aimed at giving further aid to an undertaking in a sector that was suffering from overcapacity, the airlines said.

Alitalia was “aggressively expanding capacity” which was “all the more astonishing” for a company that was suffering from severe overcapacity and was asking for rescue aid.

Alitalia had “launched a range of very aggressive business manoeuvres” in recent months with extremely low fares undercutting the cheapest fares offered by other airlines by more than 50 per cent.

The repeated aid to Alitalia the latest rescue is the third since 1997 was merely shifting its problems on to other “more efficient producers”, they said.

Alitalia last week reported a first-half loss of €620m, almost twice its original estimate. The eight airlines point out in the letter to the Commission that the latest guidelines on state aid applicable from this month say “it would not be justified to keep a firm artificially alive in a sector with long-term structural overcapacity” or when it could “only survive as a result of repeated state interventions”.

The European airlines claim the “clear idea” behind the restructuring proposed for Alitalia was to channel €1.6bn ($2bn) of Alitalia's debts into AZ Service the maintenance and ground operations company that is to be separated from AZ Fly, the flight operations company which would indirectly transfer the debt to the state.

Fintecna, an Italian state-controlled holding company, is supposed to take a 49 per cent stake in AZ Service.

This arrangement would constitute additional state aid of at least €800m, said the airlines, and constituted “an infringement of the condition that further state aid (was) prohibited”.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.