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BA calls on EU to prevent aid for Alitalia

Shareholders of troubled Alitalia vote on capital increase

14 October, 18:13
BA calls on EU to prevent aid for Alitalia (ANSA) - London, October 14 - British Airways demanded Monday that the European Union intervene to prevent Italy from providing state aid to troubled carrier Alitalia.

The demand came as shareholders in the Italian flagship air carrier were scheduled to vote on a financial package that includes a 300-million-euro capital increase for the loss-making airline.

Alitalia had been narrowly saved from the danger of defaulting on its big debts last Friday when its board members approved a major government-led bailout, featuring the capital increase and loans worth 200 million euros.

One of the lead players in the capital increase is Italy's state-owned postal company, Poste Italiane, which is reportedly making a 75-million-euro contribution.

Rival carrier British Airways said that such a move was illegal under EU laws governing state assistance to businesses.

"We expect the European Commission to take action to suspend such aid (which is )manifestly illegal," said International Airlines Group (IAG), the holding company that owns British Airways, Iberia and Vueling.

It also claimed to be historically opposed to public involvement in the private sector, saying that amounts to protectionism.

"We have always been opposed to any form of State aid," added IAG.

"Protectionism undermines competition and encourages those airlines in bankruptcy that are not in step with economic reality".

British newspaper the Financial Times sounded a similar note earlier in the day when it wrote that a better solution would be to let Alitalia's biggest shareholder, Air France-KLM, take outright control.

The Dutch-French company is the owner of a 25% stake.

"Industrial protectionism is back in vogue in Rome. It is not a pretty sight," read an editorial in the FT. Premier Enrico Letta's office said those allegations were untrue, with Alitalia's shareholders set to vote on the bailout on Monday.

"It's not protectionism, it's the opposite," government sources told ANSA. "The Alitalia operation aims to get to negotiations for a merger with an international partner in conditions for it to be possible to have positive outcomes".