Italian state railway's purchase offer for Alitalia: the 'new' company, economic discontinuity and poor management

Subject: Italian state railway's purchase offer for Alitalia: the 'new' company, economic discontinuity and poor management

The Italian state-appointed commissioners overseeing the sale of Alitalia accepted a binding purchase offer1 from the state railway company, Ferrovie dello Stato (FS)2. The deal may well be finalised in 20193,4.

The CEO of FS has already spoken of a done deal and mentioned that the trains are to be integrated into Fiumicino airport5,6, which suggests that the Commission has given its approval. This month, it conducted a study on the existing offers and a possible way forward.

As for new flight routes7, Alitalia’s management has said that it will redistribute their aircraft accordingly. Some academics have suggested, however, that this will entail a loss of EUR 313 million and that bridging loan money is being used for this purpose8.

1. Did the Commission receive a satisfactory reply from the Italian authorities regarding the purchase of new uniforms, the new lounge at Fiumicino and new routes, which had all been previously agreed with FS management, or about the non-payment of interest on the bridging loan?

2. Can it confirm whether Alitalia is a poorly functioning company with its losses and debt, and if so, how can the EUR 900 million in rescue aid be recovered if the bridging loan is declared illegal?

3. What criteria were used when it investigated this ‘new’ Alitalia and subsequently established ‘economic discontinuity’?

1 https://www.reuters.com/article/us-italy-alitalia/italian-state-railways-says-will-bid-for-alitalia-other-firms-back-

off-idUSKCN1N42EZ 2

https://uk.reuters.com/article/uk-alitalia-offer-railways/alitalia-accepts-binding-purchase-offer-from-state- railways-source-idUKKCN1NP28I?utm_source=POLITICO.EU&utm_campaign=60f95c5ab2- EMAIL_CAMPAIGN_2018_11_21_09_51&utm_medium=email&utm_term=0_10959edeb5-60f95c5ab2- 189906581 3

https://www.ilsole24ore.com/art/finanza-e-mercati/2018-10-29/fs-avanti-alitalia-mercoledi-l-offerta-vincolante- 203333.shtml?uuid=AEB9MlXG&fromSearch

4 https://www.reuters.com/article/alitalia-ma-easyjet/easyjet-submits-revised-expression-of-interest-for-alitalia-

idUSL8N1XB80T


https://www.repubblica.it/economia/2018/11/20/news/fs_col_nuovo_orario_lo_scalo_di_fiumicino_raggi unto_dai_frecciarossa-212126859/?ref=RHPPBT-BH-I0-C6-P10-S1.6-T1 6 https://www.ilsole24ore.com/art/finanza-e-mercati/2018-11-15/alitalia-fs-prove-d-integrazione-frecciarossa-

fermera-fiumicino-211213.shtml?uuid=AEVR3lhG

7 https://www.corriere.it/cronache/18_novembre_05/alitalia-vola-washington-8c65ee00-e108-11e8-b7b1-

47f8050d055b.shtml

8 https://www.lavoce.info/archives/55586/perche-trenitalia-non-risolve-i-problemi-di-alitalia/

Answer given by Ms Vestager on behalf of the European Commission

(11 January 2019)

As the Commission indicated in its replies to written questions E-004328/2018 and E-002971/2018, the Commission indeed asked the Italian authorities to provide clarifications about the new uniforms and the new lounge at Fiumicino. It also sought clarification from the Italian authorities concerning Alitalia’s new routes and the interest payments on the EUR 900 million loan. The Commission can confirm that the Italian authorities replied to those questions but cannot, at this stage, disclose the content of those replies, as the investigation into possible state aid to Alitalia is ongoing.

Given that the Commission has not decided yet whether the EUR 900 million loan constitutes incompatible state aid, it cannot speculate at this moment about the effectiveness of a potential recovery order.

As regards ‘economic discontinuity’, and in line with the reply to Written Question E-002337/2018, the Commission analyses the existence of economic (dis)continuity using a set of indicia including the scope of the assets transferred, the transfer price, the identity of the buyer, the timing of the transfer and the economic logic of the transaction. The Commission applied these indicia in its 2008 decision (9) establishing the absence of the economic continuity between the ‘old’ and ‘new’ Alitalia, a decision upheld subsequently by the Union Courts (10).

⋅1∙ https://www.reuters.com/article/us-italy-alitalia/italian-state-railways-says-will-bid-for-alitalia-other-firms-back-off-idUSKCN1N42EZ

⋅2∙ https://uk.reuters.com/article/uk-alitalia-offer-railways/alitalia-accepts-binding-purchase-offer-from-state-railways-source-idUKKCN1NP28I?

utm_source=POLITICO.EU&utm_campaign=60f95c5ab2-EMAIL_CAMPAIGN_2018_11_21_09_51&utm_medium=email&utm_term=0_10959edeb5- 60f95c5ab2-189906581

⋅3∙ https://www.ilsole24ore.com/art/finanza-e-mercati/2018-10-29/fs-avanti-alitalia-mercoledi-l-offerta-vincolante-203333.shtml?uuid=AEB9MlXG&fromSearch

⋅4∙ https://www.reuters.com/article/alitalia-ma-easyjet/easyjet-submits-revised-expression-of-interest-for-alitalia-idUSL8N1XB80T

⋅5∙ https://www.repubblica.it/economia/2018/11/20/news/fs_col_nuovo_orario_lo_scalo_di_fiumicino_raggiunto_dai_frecciarossa-212126859/?ref=RHPPBT-BH-I0-

C6-P10-S1.6-T1

⋅6∙ https://www.ilsole24ore.com/art/finanza-e-mercati/2018-11-15/alitalia-fs-prove-d-integrazione-frecciarossa-fermera-fiumicino-211213.shtml?uuid=AEVR3lhG

⋅7∙ https://www.corriere.it/cronache/18_novembre_05/alitalia-vola-washington-8c65ee00-e108-11e8-b7b1-47f8050d055b.shtml

⋅8∙ https://www.lavoce.info/archives/55586/perche-trenitalia-non-risolve-i-problemi-di-alitalia/

⋅9∙ Decision C(2008) 6745 final, of 12 November 2008, concerning state aid N 510/2008 — Italy — Sale of assets of the airline Alitalia.

⋅10∙ Judgment of 28 March 2012, Ryanair v Commission, T-123/09, EU:T:2012:164, upheld on appeal by judgment of 13 June 2013, Ryanair v Commission, C-287/12

P, EU:C:2013:395.