State aid: Commission approves €39.7 million of Italian aid measure to compensate Alitalia for further damages suffered due to coronavirus outbreak

The European Commission has found that an Italian aid measure of €39.7 million to support Alitalia is in line with EU State aid rules. This measure aims at compensating the airline for the damages suffered on certain routes due to the coronavirus outbreak during the period between 1 March and 30 April 2021.

Alitalia is a major network airline operating in Italy. With a fleet of over 95 planes. In 2019, the company served hundreds of destinations all over the world, carrying about 20 million passengers from its main hub in Rome and other Italian airports to various international destinations.

The restrictions put in place in Italy and other countries to limit the spread of a second and third wave of the coronavirus pandemic have heavily affected Alitalia's operations. As a result, Alitalia incurred significant operating losses until at least 30 April 2021.

On 25 June 2021, Italy notified to the Commission an additional aid measure to compensate Alitalia for further damages suffered on certain specific routes from 1 March to 30 April 2021 due to the emergency measures necessary to limit the spread of the virus. The support will take the form of a €39.7 million direct grant, which corresponds to the estimated damage directly caused to the airline in that period according to a route-by-route analysis of the eligible routes. This follows the Commission decisions of 12 May 2021, 26 March 2021, 29 December 2020 and 4 September 2020 approving Italian damage compensation measures in favour of Alitalia, compensating the airline for the damages suffered from 1 to 31 January 2021, 1 November to 31 December 2020, 16 June to 31 October 2020 and 1 March to 15 June 2020 respectively.

The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures granted by Member States to compensate specific companies or sectors for damage directly caused by exceptional occurrences. The Commission considers that the coronavirus outbreak qualifies as such an exceptional occurrence, as it is an extraordinary, unforeseeable event having significant economic impact. As a result, exceptional interventions by the Member State to compensate for the damages linked to the outbreak are justified.

The Commission found that the Italian measure will compensate for damages suffered by Alitalia which are directly linked to the coronavirus outbreak that qualifies as exceptional occurrence. The damage is calculated as the loss of profitability on certain routes due to the travel restrictions and other containment measures during the relevant period. It also found that the measure is proportionate, as the route-by-route quantitative analysis submitted by Italy appropriately identifies the damage attributable to the containment measures, and therefore the compensation does not exceed what is necessary to make good the damage on those routes.

On this basis, the Commission concluded that the additional Italian damage compensation measure is in line with EU State aid rules.