COMMISSION DECISION (EU) 2022/795

of 10 September 2021

on State aid in favour of Alitalia SA.48171 (2018/C) (ex 2018/NN, ex 2017/FC) implemented by Italy

(notified under document C(2021) 6659)

(Only the Italian version is authentic)

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 108(2) thereof,

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,

After giving notice to the parties concerned to submit their comments pursuant to those provisions (1) and having regard to their comments,

Whereas:

1. PROCEDURE

(1) On 5, 12 and 15 May 2017, respectively, the airlines Ryanair Ltd (‘Ryanair’), Adria Airways d.o.o. (‘Adria’) and IAG International Airlines Group S.A. (‘IAG’) (jointly, ‘the complainants’) submitted three formal complaints to the Commission alleging that Italy had granted unlawful and incompatible State aid to Alitalia – Società Aerea Italiana S.p.A. in amministrazione straordinaria (‘Alitalia’). The complainants indicated that on 2 May 2017 the Italian authorities had granted Alitalia liquidity support in the form of a EUR 600 million loan (‘the initial loan’). The complainants alleged that the initial loan was an unlawful and incompatible State aid.

(2) On 14 June 2017, the Commission forwarded the complaints to the Italian authorities, requesting them to clarify the issues brought forward in those complaints. The Italian authorities replied to that request on 18 July 2017, and the Commission forwarded that reply to the complainants on 30 November 2017.

(3) On 20 June, 12 September and 16 October 2017, IAG submitted additional information and updates regarding the expansion of Alitalia’s route network after the granting of the initial loan.

(4) On 30 October 2017, Adria submitted information indicating that Decree-Law No 148 of 16 October 2017 on ‘Urgent provisions on financial matters and for un-deferrable needs’ (2) (‘Decree-Law 148/2017’) had provided for the granting of an additional EUR 300 million loan to Alitalia (‘the additional EUR 300 million loan’), bringing the total loan amount to EUR 900 million (the initial loan and the additional EUR 300 million loan will jointly be referred to as ‘the two State loans’).

(5) On 21 December 2017, the Commission sent a request for information to the Italian authorities, which replied to that request on 24 January 2018.

(6) On 23 January 2018, Italy notified the two State loans as rescue aid within the meaning of the Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (3) (the ‘Rescue and Restructuring Guidelines’).

(7) By letter dated 23 April 2018, the Commission informed Italy that it had decided to initiate the procedure provided for in Article 108(2) TFEU in respect of the two State loans.

(8) The Commission decision to initiate the procedure (‘the Opening Decision’) was published in the Official Journal of the European Union on 20 July 2018. The Commission invited interested parties to submit their comments on the Opening Decision.

(9) The Commission received comments from Italy, by letters dated 25 May 2018 and 25 September 2018, and from three interested parties: (i) Aegean Airlines S.A. (‘Aegean’), (ii) an interested party which requested that its identity be withheld pursuant to Article 6(2) of Council Regulation (EU) 2015/1589 (4) (‘the anonymous interested party’) and (iii) Ryanair. On 15 November 2018 and 17 January 2019, the Commission sent the comments of the three interested parties to the Italian authorities inviting them to submit their observations, which they did by letter dated 20 March 2019.

(10) The Commission requested further clarifications from the Italian authorities on 17 September 2018, 23 November 2018, 6 and 11 December 2018, 26 February 2019, 10 May 2019 and 2 July 2019. On 19 September 2019 and 28 October 2019, the Commission sent reminders regarding missing replies to the request for information of 2 July 2019.

(11) The Italian authorities provided the Commission with further comments and information on 1 October 2018, 9 and 27 November 2018, 17 December 2018, 25 January 2019, 11 February 2019, 1 and 18 April 2019, 15 May 2019, 3 and 12 June 2019, 9 July 2019, 6 August 2019, 2 October 2019, 17 October 2019 and 19 November 2019.

(12) The Commission services met the Italian authorities on several occasions, including on the following dates: 15 June 2017, 26 July 2017, 9 February 2018, 13 April 2018, 27 September 2018, 14 November 2018, 14 December 2018, 16 January 2019, 20 February 2019, 21 February 2019, 9 April 2019, 20 June 2019, 26 July 2019 and 27 September 2019.

(13) The Commission also met with Alitalia (on 21 February 2019 and 9 April 2019), Aegean (on 10 January 2019) and the anonymous interested party (on 21 March 2019).

(14) On 7 March 2019, Adria (5) submitted a new complaint alleging that the postponement of the maturity dates of the two State loans were unlawful and incompatible aid. On 22 March 2019, the Commission forwarded that complaint to the Italian authorities, requesting them to clarify the issues brought forward in that complaint. Italy replied to that request on 6 August 2019.

2. DESCRIPTION OF THE TWO STATE LOANS AND PERTINENT FACTS

2.1. The two State loans granted by the Italian State

(15) On 23 April 2018, the Commission opened the formal investigation procedure with regard to the two State loans (‘the measure’).

(16) The initial loan was provided for in Decree-Law No 55 of 2 May 2017 on ‘Urgent measures to ensure continuity of the service provided by Alitalia S.p.A.’ (6) (‘Decree-Law 55/2017’). Alitalia S.p.A was placed in extraordinary administration on 2 May 2017 (see recital 41).

(17) Article 1 of Decree-Law 55/2017 provided that ‘in order to avoid interruption of the service provided by Alitalia –Società Aerea Italiana –S.p.A. under extraordinary administration, for domestic and international flight connections, including those with public service obligations within the meaning of current European legislation, taking into account the social hardships and serious inconvenience to users that would be caused by such interruption, financing of six hundred million euro in return for payment is hereby provided for a period of six months (…) in favour of Alitalia –Società Aerea Italiana –S.p.A. in extraordinary administration, to be used for the immediate management needs of the same company and other companies of the group subject to the extraordinary administration procedure (…)’. Although the granting legislation refers to the measure as ‘financing’ and Italy and Alitalia did not enter into a loan agreement, the Commission uses the term ‘loan’ to refer to the measure as the financing was repayable with interest.

(18) The State granted the initial loan with an interest rate of 6-month Euribor plus 1 000 basis points, and was to be repaid within six months as from the first disbursement of the loan, i.e. by 5 November 2017. The initial loan had priority over the repayment of any other debt generated by Alitalia during the extraordinary administration procedure.

(19) Italy initially prolonged the maturity date of the initial loan for six months, until 5 May 2018, by Decree-Law 148/2017; subsequently by Law No 172 of 4 December 2017 (7) (‘Law 172/2017’), it prolonged the maturity date until 30 September 2018. A further prolongation of the initial loan until 15 December 2018 was laid down by Decree-Law 38/2018 of 27 April 2018. That maturity date was subsequently modified several times (see Section 2.2.1).

(20) The additional EUR 300 million loan was granted by Italy by Decree-Law 148/2017 with the result of increasing the State financing up to EUR 900 million. Article 12(2) of Decree-Law 148/2017 provided that ‘in order to guarantee the fulfilment of the transport obligations assumed by the extraordinary administration until the date of the business divestment without interrupting the continuity of the air transport service, in order to ensure the regular provision of domestic and international flight connections performed by the undertakings referred to in paragraph 1 pending completion of the business divestment procedure to be defined and implemented, the amount of financing …. shall be increased by EUR 300 million to be granted in 2018’. Since the additional EUR 300 million loan was granted as an increase of the amount of the initial loan, the same terms and conditions applied, including the interest rate, as for the initial loan, except as regards the maturity of the loan. The maturities of the two loans were later synchronised (see Section 2.2.1).

(21) According to Decree-Law 148/2017, the additional EUR 300 million loan was to be paid by the State to Alitalia in 2018 and to be reimbursed by 31 December 2018. That Decree-Law also extended the deadline for the completion of the tendering procedure (see Section 2.6) until 30 April 2018 in order to enable the disposal of Alitalia’s business complex.

2.2. Timeline of the disbursements of the two State loans

(22) The initial loan and the additional EUR 300 million loan were granted by legislative acts and were to be paid following the adoption of a Decree of the Minister of Economic Development together with the Minister of Economy and Finance. According to those legislative acts, the two State loans were financed from the budget allocated to the Minister of Economic Development.

(23) According to Decree-Law 55/2017, the initial loan was granted in order to avoid interruption of both international and domestic flights of Alitalia while under extraordinary administration, including flights falling under Alitalia’s Public Service Obligations (‘PSOs’), considering the serious social difficulties and serious inconvenience for users that an interruption of Alitalia’s flights would have caused.

(24) The initial loan was to be disbursed by a Decree of the Minister of Economic Development together with the Minister of Economy and Finance within five days from Alitalia being placed under extraordinary administration, and had to be used for urgent operational needs of the same company and other companies of the group subject to the extraordinary administration procedure. Urgent operational needs also included those relating to international systems used to settle economic relations with carriers.

(25) On 4 May 2017, the extraordinary commissioners of Alitalia requested an urgent advance drawdown of EUR 240 million from the EUR 600 million loan. According to the Italian authorities, this was done primarily in order (i) to avoid the exhaustion of the cash needed to carry out Alitalia’s business activities in the days immediately following the start of the extraordinary administration procedure, and (ii) to allow Alitalia to pay the security deposit requested by the International Air Transport Association (‘IATA’). Without the payment of the security deposit, Alitalia risked being suspended from the systems (8) managed by IATA, which are essential for business continuity. That security deposit was paid in May 2017.

(26) In October 2017, a second instalment of the initial loan amounting to EUR 360 million was released to Alitalia. According to the Italian authorities, it was provided at the request of the extraordinary commissioners to provide Alitalia with the necessary funding to maintain regular flights pending completion of the divestment of the relevant business activities.

(27) According to Decree-Law 148/2017, which granted the additional EUR 300 million loan, the loan was enacted to ensure that Alitalia and other group companies could fulfil their flight obligations without interruption until the disposal of Alitalia’s business activities.

(28) Decree-Law 148/2017 was converted into law by Law 172/2017. That law indicated that the loan extension was necessary to ensure the fulfilment of Alitalia’s transport obligations.

(29) The additional EUR 300 million loan was disbursed to Alitalia on 15 January 2018.

2.2.1. Synchronisation of the maturity of the two State loans

(30) On 27 April 2018, Decree-Law 38/2018 provided for another prolongation of the initial loan until 15 December 2018. That Decree-Law also set the same date as the new deadline for the repayment of the additional EUR 300 million loan, thereby synchronising the maturity of the initial loan and of the additional EUR 300 million loan.

(31) On 14 December 2018, Decree-Law 135/2018 set the maturity date for the reimbursement of the two State loans from thirty days from the sale of Alitalia’s assets coming into effect or, in any event, no later than 30 June 2019.

2.2.2. Provisions of the Growth Decree-Law

(32) On 30 April 2019, Italy adopted Decree-Law No 34 on ‘Urgent measures for economic growth and for the resolution of specific crisis situations’ (9) (‘Growth Decree-Law’), which provided for: (a) the elimination of seniority of the two State loans over any other debt incurred by Alitalia in extraordinary administration; (b) the prolongation of the repayment of the two State loans until after Alitalia’s assets were sold by the extraordinary administration; (c) the payment of the interest due to the State accruing from the date of the payment of the two State loans to Alitalia until no later than 31 May 2019; (d) the authorisation for the Ministry of Economy and Finance to use the interest accrued on the two State loans to subscribe to shares in the newly created company to which the assets of Alitalia are to be transferred.

(33) As a result of the Growth Decree-Law, interest on the two State loans ceased to accrue as from 31 May 2019.

(34) On 2 December 2019, the Growth Decree-Law was amended by Decree-Law No 137 ‘Urgent measures to ensure the continuity of the service performed by Alitalia – Società Aerea Italiana S.p.A. and Alitalia CityLiner S.p.A. in extraordinary administration’ (10), which synchronised the maturity of the interest due with that of the principal, as it provided for the prolongation of the payment of the principal and interest, until after Alitalia’s assets were sold by the extraordinary administration.

(35) The assessment of the two State loans as a single measure is set out in Section 5.1.4.1.1.

2.3. The beneficiary

(36) The beneficiary of the measure is Alitalia –Società Aerea Italiana –S.p.A in amministrazione straordinaria (‘Alitalia’) together with the subsidiaries directly and indirectly owned by it.

(37) Both Decree-Law 55/2017, the legal basis for the initial loan, and Decree-Law 148/2017, the legal basis of the additional EUR 300 million loan, provide that the two State loans are granted in favour of Alitalia. Decree-Law 55/2017 grants ‘a financing of EUR 600 million loan in return for payment … in favour of Alitalia –Società Aerea Italiana –S.p.A.’ (see recital 17); Decree-Law 148/2017 refers to the financing granted by Decree-Law 55/2017, providing for an additional EUR 300 million loan in favour of Alitalia.

(38) Alitalia is a company headquartered in Fiumicino, Rome, operating in the air transport sector. Alitalia’s total headcount was 11 377 on 31 December 2017 (11). Alitalia’s shareholding structure and Alitalia Group’s structure is shown on Chart 1 (12) and the shareholders of Compagnia Aerea Italiana S.p.A. (‘CAI’) (13) as of May 2019 in Table 1. Chart 1 Ownership structure of Alitalia and structure of the Alitalia Group on 23 January 2018 L1412022EN4710120220516EN0008.0001491502DRAFTRECOMMENDATION No 1/2022 OF THE EU-GEORGIA ASSOCIATION COUNCILof …on the EU-Georgia Association Agenda 2021-2027THE EU-GEORGIA ASSOCIATION COUNCIL,Having regard to the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other part,Whereas:(1)The Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other partOJ L 261, 30.8.2014, p. 4. (the Agreement) was signed on 27 June 2014 and entered into force on 1 July 2016.(2)Pursuant to Article 406(1) of the Agreement, the Association Council has the power to adopt recommendations for the purpose of attaining the objectives of the Agreement.(3)Pursuant to Article 420(1) of the Agreement, the Parties are to take any general or specific measures required to fulfil their obligations under the Agreement and are to ensure that the objectives set out in the Agreement are attained.(4)Article 11 of the Rules of Procedure of the Association Council provides for the possibility of taking decisions and making recommendations by written procedure if both Parties so agree.(5)The Union and Georgia have agreed to consolidate their partnership by agreeing on a set of priorities for the period 2021-2027 (the EU-Georgia Association Agenda 2021-2027) for the joint work towards attaining the objectives of political association and economic integration as set out in the Agreement.(6)The Parties to the Agreement have agreed on the text of the EU-Georgia Association Agenda 2021-2027, which will support the implementation of the Agreement, focusing cooperation on commonly identified shared interests,HAS ADOPTED THE FOLLOWING RECOMMENDATION:Article 1The Association Council recommends that the Parties implement the EU-Georgia Association Agenda 2021-2027, as set out in the AnnexSee document ST 8327/22 ADD 2 on https://register.consilium.europa.eu..Article 2The EU-Georgia Association Agenda 2021-2027, as set out in the Annex, shall replace the EU-Georgia Association Agenda which was adopted on 20 November 2017.Article 3This Recommendation shall take effect on the day of its adoption.Done at Tbilisi, [day month year].For the Association CouncilThe Chair Table 1 Shareholders of CAI in May 2019. (To the Commission’s knowledge, the shareholder structure remains unchanged.) L1412022EN4710120220516EN0008.0001491502DRAFTRECOMMENDATION No 1/2022 OF THE EU-GEORGIA ASSOCIATION COUNCILof …on the EU-Georgia Association Agenda 2021-2027THE EU-GEORGIA ASSOCIATION COUNCIL,Having regard to the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other part,Whereas:(1)The Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Georgia, of the other partOJ L 261, 30.8.2014, p. 4. (the Agreement) was signed on 27 June 2014 and entered into force on 1 July 2016.(2)Pursuant to Article 406(1) of the Agreement, the Association Council has the power to adopt recommendations for the purpose of attaining the objectives of the Agreement.(3)Pursuant to Article 420(1) of the Agreement, the Parties are to take any general or specific measures required to fulfil their obligations under the Agreement and are to ensure that the objectives set out in the Agreement are attained.(4)Article 11 of the Rules of Procedure of the Association Council provides for the possibility of taking decisions and making recommendations by written procedure if both Parties so agree.(5)The Union and Georgia have agreed to consolidate their partnership by agreeing on a set of priorities for the period 2021-2027 (the EU-Georgia Association Agenda 2021-2027) for the joint work towards attaining the objectives of political association and economic integration as set out in the Agreement.(6)The Parties to the Agreement have agreed on the text of the EU-Georgia Association Agenda 2021-2027, which will support the implementation of the Agreement, focusing cooperation on commonly identified shared interests,HAS ADOPTED THE FOLLOWING RECOMMENDATION:Article 1The Association Council recommends that the Parties implement the EU-Georgia Association Agenda 2021-2027, as set out in the AnnexSee document ST 8327/22 ADD 2 on https://register.consilium.europa.eu..Article 2The EU-Georgia Association Agenda 2021-2027, as set out in the Annex, shall replace the EU-Georgia Association Agenda which was adopted on 20 November 2017.Article 3This Recommendation shall take effect on the day of its adoption.Done at Tbilisi, [day month year].For the Association CouncilThe Chair

(39) When it was placed in extraordinary administration, Alitalia owned the entire share capital of Alitalia CityLiner S.p.A. (‘Cityliner’) and of Challey Ltd Cityliner, a regional airline fully owned by Alitalia (14), operates as Alitalia’s transport capacity provider (15) covering part of the short-haul network. Challey Ltd is a sub-holding based in Ireland, which, itself, controls other companies, also based in Ireland (‘Irish subsidiaries’), that own the entire fleet of aircrafts used by Alitalia and CityLiner and registered in Ireland, as well as minority interests in other part-owned companies. Challey Ltd and the Irish subsidiaries are not in extraordinary administration. Alitalia together with its subsidiaries accordingly form the Alitalia Group (16) (‘the Alitalia Group’). Since Alitalia accounts for the overwhelming majority of the Alitalia Group’s activities and employs 97 % of the total headcount of the Alitalia Group (17), any evaluation pertaining to the group covers mutatis mutandis Alitalia.

(40) Alitalia is 49 % owned by Etihad Investment Holding Company LLC and 51 % owned by MIDCO S.p.A., which, itself, is 100 % owned by CAI S.p.A. In the period since its acquisition by CAI S.p.A. in 2008, Alitalia has been continually loss-making. It attempted to improve its position in early 2017 with an ambitious cost-cutting plan involving more than EUR 1 billion in cost reductions, which was supposed to pave the way for additional financing (EUR 2 billion including EUR 900 million of new money), mainly led by its shareholder Etihad (the ‘Turnaround Plan’, see Section 4.2.1.1). The Turnaround Plan was to be put in place through a pre-insolvency procedure (18). That procedure (19) required the agreement of the workforce (20) as major cost cutting measures would have affected them. However, the agreement was rejected in the workers’ referendum held on 24 April 2017 because of the planned measures to cut labour costs, which foresaw amongst others an average wage cut of 33 %. As the Turnaround Plan could not be implemented, and the shareholders did not provide additional funding, Alitalia was placed under extraordinary administration.

2.4. The extraordinary administration procedure

(41) Upon the request of Alitalia’s board of directors, Alitalia was placed under extraordinary administration (21) by the Decree of the Italian Ministry of Economic Development dated 2 May 2017. That decree also appointed three extraordinary commissioners to manage Alitalia. Alitalia was then declared insolvent by judgment of the Court of Civitavecchia of 11 May 2017. Thereafter, on 12 May 2017, Cityliner (22) was also placed under extraordinary administration by decree of the Italian Ministry of Economic Development. Cityliner was then declared insolvent by judgment of the Court of Civitavecchia of 26 May 2017.

(42) In their submission of 20 March 2019, the Italian authorities indicated that, because of the admission of Alitalia to the extraordinary administration procedure, the private shareholders had been deprived of all the powers of management and supervision of Alitalia. In their place, by virtue of the legislation governing the extraordinary administration, the extraordinary commissioners were entrusted with managing the company until an extraordinary administration programme (‘the EA programme’) was authorised by the Minister of Economic Development. On the adoption of the EA programme, they would be authorised to sell the assets of Alitalia under the supervision of the Ministry of Economic Development.

(43) On 26 January 2018, Alitalia’s extraordinary commissioners provided to the Ministry of Economic Development a programme aiming at the sale of Alitalia’s assets in operation (23) within a year, which was authorised by Ministerial decree of 23 March 2018. On 7 May 2019, the initial maturity date of the completion of the sales programme was postponed until 23 March 2020.

(44) The sale procedure laid down by the authorised EA programme covered the assets relating to the business of Alitalia and Cityliner, the companies in extraordinary administration.

2.4.1. Extraordinary administration (Legislative Decree No 270/1999, Prodi-bis Law)

(45) Extraordinary administration is an insolvency procedure set out in Legislative Decree No 270 of 8 July 1999 (24) (‘Prodi-bis Law’) for the insolvency of large companies aimed at rescuing them, preserving their value through the continuation of their activities until restructuring or sale of the assets. Companies are only admitted to extraordinary administration if their return to economic equilibrium seems possible.

(46) Under the extraordinary administration, the previous shareholder is deprived of its decision-making powers, while the company continues operating. The management of the business and the administration of the company’s assets are taken over by the extraordinary commissioners. They are appointed by the Court, which declares the company insolvent. The extraordinary commissioners act in accordance with the EA programme (restructuring or sale of assets) authorised by the Minister of Economic Development.

(47) When the extraordinary administration procedure takes effect, the debts incurred prior to the procedure are frozen and become subordinated to the debts incurred during the extraordinary administration as a result of the continuation of the business operation. The status of those debts incurred during the extraordinary administration as ‘super senior’ is provided by an explicit provision of law.

2.4.2. Extraordinary administration for large companies with at least 500 workers and EUR 300 million of debt (Decree-Law No 347/2003, Marzano Law)

(48) For large companies with at least 500 workers and at least EUR 300 million of debt, additional special rules apply under Decree-Law No 347 of 23 December 2003 (25) (‘Marzano Law’). Alitalia falls within the scope of the Marzano law since, as set out in the judgment declaring Alitalia insolvent, Alitalia has ‘in excess of five hundred subordinate employees for at least one year and debts totalling an amount in excess of three hundred million Euros’ (26).

(49) According to the Marzano law, companies may submit their request to be placed under extraordinary administration as provided for by that law directly with the Ministry of Economic Development, even before the Court rules on their solvency. The extraordinary commissioners are appointed by the Minister of Economic Development and not by the Court, They operate under the supervision of the Minister of Economic Development. The initial duration of the extraordinary administration is 12 months as from the authorisation of the EA programme by the Minister of Economic Development, but can be further extended by additional (maximum) 36 months by Decree of the Ministry of Economic Development. In case of a group of companies, the procedure can be extended to the other companies of the group in addition to the parent company (as happened for Cityliner).

(50) In addition, for companies operating essential public services, the Marzano Law provides the following: — the extraordinary commissioners have the powers to sell the business assets through a negotiated procedure (provided that the sale price agreed by the extraordinary commissioners with the buyer is not lower than the market value established by an independent expert’s report).

2.5. Public statements by members of the Italian government

(51) On 25 April 2017, following the workers’ rejection of the Turnaround Plan, the Minister of Economic Development at the time, whose portfolio included the Alitalia dossier, was interviewed in the Italian newspaper Corriere della Sera. The Minister ruled out nationalisation or the State paying Alitalia’s debts. However, in response to a question about a possible bridge loan to Alitalia, the Minister declared that the government would provide ‘[t]he bare minimum to complete the process [sale of Alitalia assets by the extraordinary commissioners]. Stopping airplanes on the ground is not imaginable because the connections would be compromised and the travellers would be hurt resulting in quite significant direct and indirect repercussions’ (27).

(52) On 30 April 2017, the Minister of Economic Development was asked in a media interview why Alitalia could not be allowed to fail. The Minister explained that the failure of Alitalia ‘[w]ould be a shock for the gross domestic product, higher than the scenario of a six-month period covered by the government loan to find a buyer … We cannot [let it] fail from one day to the next because we would no longer have connections from one part of the country to the other. There would be no other companies ready to make connections, for a period they would no longer be served’ (28).

(53) On 2 May 2017, an Italian financial newspaper reported that the Prime Minister at the time stated that the Government ‘intervened not only at the explicit request of the shareholders’ meeting, but on our part is an act of responsibility by those who must ensure certain fundamental services’ (29). In the same article, the Minister for Territorial Cohesion and the South stated that ‘by the decisions [of the Council of Ministers] on Alitalia, extraordinary administration and bridge loan of six months, we have secured all the routes. Air connections with the South are therefore guaranteed’.

(54) According to an article in the Italian press on 3 May 2017, the Minister of Economic Development at the time stated that ‘the government’s strategy has always been to minimise the impact on public accounts’ and that the government ‘[t]ried to avoid’ granting the bridge loan of EUR 600 million, but it was ‘[a] necessary and inevitable evil’ because ‘putting the planes on the ground from morning to night would cost Italian taxpayers much more’. According to that article, the Minister then recalled that there are ‘4,9 million Alitalia prepaid ticket reservations’ and stopping everything would cause damage to ‘[G]DP [and Italy’s] image, and then … the connections for the country would be lost for a certain number of days or weeks and this is impossible’. The initial loan, according to the Minister, ‘therefore serves to avoid a worse situation from an economic point of view’ (30).

(55) In an interview published on 15 October 2017, the then Minister of Infrastructures and Transport declared that the additional EUR 300 million loan was giving the extraordinary commissioners ‘peace of mind. We don’t want to sell Alitalia off cheaply, but sell it. We look at what happened to Air Berlin, acquired by Lufthansa: they have halved planes and personnel. But breaking a core business is always a defeat for everyone. That’s why for Alitalia we’re looking rather at the Meridiana model: finding a suitable partner which is able to improve it’. When asked whether it would be for the next government to deal with Alitalia, the Minister replied ‘Not necessarily. The company is there and will continue to be there. Tomorrow the offers will close, let’s see what the commissioners will tell us. Between now and Christmas we will have clarity on the future of Alitalia. But this government does not want to take hasty decisions’ (31).

(56) In the same vein, after the rejection by the government of Lufthansa’s offer (see the footnote in recital 61), the then Minister of Infrastructures and Transport declared, in an interview published on 24 November 2017, that Lufthansa’s offer ‘was not worthy of a large country like Italy and a company like Alitalia with thousands of workers and some of the most important connections in the country. We will wait until we are presented with an industrial development plan worthy of the name, not one which just imposes suffering on the workers. We have time until the end of the government’s mandate; we are trying to get the best conditions. I recall that the Alitalia crisis is due to managerial errors, not to the market, which is indeed expanding rapidly’ (32).

2.6. The sales process of Alitalia and its extensions

(57) Article 1 of Decree-Law 55/2017, which granted the initial loan, provided that, in order to draw up the EA programme, the extraordinary commissioners had to publish, by 17 May 2017, a call for expressions of interest to purchase or restructure Alitalia’s business complex. The process following that call for interest, to be carried out within six months of granting of the first financing, was to ensure that the principles of transparency, equal treatment and non-discrimination were met.

(58) On 17 May 2017, in accordance with Article 1 of Decree-Law 55/2017, the extraordinary commissioners launched a call for expression of interest with the aim of deciding whether Alitalia could be restructured or its assets were to be sold, either as operating units or as operating goods and contracts.

(59) The period within which expressions of interest were to be made came to an end on 21 July 2017. On 1 August 2017, the extraordinary commissioners, as authorised by the Minister of Economic Development, organised a tender process to sell the assets of the companies in extraordinary administration (Alitalia and Cityliner) as operating units with a deadline of 16 October 2017 for the presentation of the offers, and a deadline of 5 November 2017 for the finalisation of the sales process.

(60) For the tender, the majority of the assets of the companies in extraordinary administration (Alitalia and Cityliner) were split into separate operating units, consisting specifically of (a) the business activities taken as a whole (‘Complete Batch’ or ‘Single Lot’); or alternatively (b) the aviation activities (‘Aviation Batch’); and (c) the handling activities (‘Handling Batch’). The Aviation Batch comprised the assets and legal relationships connected to the air transportation activities carried out by the companies in extraordinary administration, including the fleet, the slots, the brand, the aircrafts of the Irish subsidiaries and the leasing and maintenance contracts. The Handling Batch included assets and legal relationships of the companies in extraordinary administration connected to the services carried out in airports for the assistance on ground in favour of third parties. The Complete Batch included assets and legal relationships of the Aviation Batch and of the Handling Batch. The bidder was free to define the perimeter of the purchase offer.

(61) Decree-Law 148/2017, which granted the additional EUR 300 million loan, extended the initial deadline of 5 November 2017 for the completion of the sales process until 30 April 2018. Then following the unsuccessful tender (33) on 22 December 2017, the extraordinary commissioners opened a new negotiated procedure (34) to sell Alitalia’s assets.

(62) The negotiated procedure had an original deadline on 10 April 2018, which was subsequently extended to 31 October 2018. At the end of the negotiated procedure on 31 October 2018, four proposals (35) were received. Only the offer of the Italian rail company Ferrovie dello Stato (‘FS’), which was backed by a EUR 17,5 million bid bond, was deemed to be valid by the extraordinary commissioners. As FS’s offer was conditional, FS was granted a new deadline to submit its binding offer. The deadline to submit the binding offer was postponed several times, most recently until 21 November 2019.

(63) FS failed to submit a final binding offer by that date. Due to that failure to submit a bid, the Commission understands that the sales process was deemed to have failed (36).

2.7. The Opening Decision

(64) In the Opening Decision, the Commission provisionally concluded that the two State loans constituted State aid within the meaning of Article 107(1) TFEU.

(65) In particular, the Commission considered that the two State loans conferred an economic advantage on Alitalia for the purposes of Article 107(1) TFEU. The claim that Italy in granting Alitalia the two State loans had acted as a market economy operator was not substantiated by evidence.

(66) In relation to the compatibility of the aid, the Commission considered that Alitalia was a firm in difficulty within the meaning of the Rescue and Restructuring Guidelines and came to the provisional conclusion that there were serious doubts about the compatibility of the two State loans with the internal market under Article 107(3)(c) TFEU.

(67) In particular, Italy had argued that the two State loans were needed to prevent a sudden exit from the market, and the associated negative consequences, of a company playing an important systemic role in respect of the entire air transport sector of Italy. The Commission considered that there was not sufficient information to reach the conclusion about the existence of a contribution to an objective of common interest.

(68) The Commission also had doubts whether the appropriateness criterion of the two State loans had been met, since the two State loans were not reimbursed within six months after their first disbursement to Alitalia. In addition, it was not clear when the liquidation would occur and whether it would be finalised within a reasonable timeframe as required by the Rescue and Restructuring Guidelines. Therefore, the aid appeared to allow continued operations of Alitalia between May 2017 and at least October 2019, keeping an otherwise non-viable business on the market for significantly longer than a temporary period of six months.

(69) In addition, the Commission had doubts whether the proportionality criterion of the two State loans had been met. The liquidity plan provided by Italy included a substantial liquidity cushion (EUR 796 million at the end of first quarter 2018, dropping gradually to EUR 546 million at the end of 2018). However, Italy failed to explain why that excess liquidity was strictly necessary to keep Alitalia in business for six months. Therefore, the Commission had doubts whether the amount of the aid was limited to the minimum necessary.

(70) Lastly, based on the information provided by Italy, the Commission provisionally concluded that Alitalia had not benefitted from any rescue aid, restructuring aid or temporary restructuring support in the past 10 years prior to the granting of the two State loans and that the ‘one time, last time’ principle, set out in points 70 and 71 of the Rescue and Restructuring Guidelines, had been respected. The Commission had previously concluded that there was no economic continuity between CAI and Alitalia Linee Aeree SpA, parts of whose assets were acquired by CAI and used to create the present Alitalia (37). Alitalia Linee Aeree SpA had previously received a loan of EUR 300 million, which the Commission concluded was aid (38) under the previous version of the Rescue and Restructuring Guidelines (39). Had there been continuity, Alitalia would not have been eligible for aid under the Rescue and Restructuring Guidelines.

3. COMMENTS FROM INTERESTED PARTIES

(71) Three interested parties (i.e. Ryanair, the anonymous party concerned, Aegean) submitted their comments to the Commission under Article 108(2) TFEU.

3.1. Ryanair

(72) On the existence of aid, Ryanair argues that the Market Economy Operator Principle is not applicable either (i) to the initial loan, as Italy granted it as a public authority pursuing objectives of the general interest relating to the users of Alitalia’s transport service and its workers and to the territorial continuity of the Italian Republic; or (ii) to the additional EUR 300 million financing, which cannot be accordingly justified by the State’s prior exposure to Alitalia.

(73) Concerning the compatibility of the aid, Ryanair argues that the compatibility conditions are not fulfilled. With regard to the common interest criterion, had Alitalia’s fleet been grounded, competing low fare airlines would have been able to replace any lost service – including PSOs -, as demonstrated by the revitalization of the air traffic in Budapest and Barcelona airports following the collapse of Malév and Spanair respectively. Rather than helping the efficiency of the Italian air transport market, the aid in fact hinders it and harms the common interest. The aid is used to compete unfairly on profitable routes, also having regard to new services and initiatives (i.e. the new lounge ‘Casa Italia’ at Rome’s airport (40)) launched by Alitalia. With regard to the return to long-term viability condition, Ryanair notes that, in the absence of a business plan, the two State loans create an unjustified cash reserve for Alitalia. Ryanair also submits that in addition to Alitalia’s assets being insufficient to reimburse the loan, it remains loss-making, losing EUR 1,75 million per day with a daily negative EBIDTA of EUR 0,7 million.

3.2. The anonymous interested party

(74) With regard to the compatibility of the aid, the anonymous interested party argues that, contrary to the requirement that the rescue aid should be of an urgent and temporary nature, as it aims to respond to an acute liquidity crisis, the aid favours Alitalia over other airlines. This is because the aid artificially improves Alitalia’s financial situation, as Alitalia’s problems are not new but rather long-term issues, which have been dramatically and continuously increasing over the past years.

(75) The anonymous interested party further argues that other means, less distortive for the market, would have been available to Alitalia to ensure the on-going operations during the extraordinary administration of Alitalia.

3.3. Aegean

(76) Aegean indicates that based on its market knowledge the terms of the initial loan and of the additional EUR 300 million loan were not in line with the conditions of financing which were likely to be available on the market to an airline in difficulty such as Alitalia. Aegean further notes that the declared objective of the initial loan and the additional EUR 300 million loan was to ensure the company remained a going concern. In light of this, it is clear that in pursuing that objective Italy could not have been guided by economic principles but rather political considerations such as maintaining employment and avoiding social unrest.

(77) Referring to the compatibility of the aid, Aegean argues in particular that: (a) the aid was not limited to the minimum, as it was manifestly disproportionate as regards both the amount as well as its terms. The aid allowed Alitalia not only to remain active on the market, but also to scale up its operations by opening new competing routes under very low airplane load factors; (b) the aid had a distortive effect on the market, which had been preserved for each day it remained at the disposal of Alitalia, with the additional negative effect of Alitalia’s leveraging of the advantage received by the two State loans to market its services aggressively and compete with other airlines; (c) contrary to point 55(e) of the Rescue and Restructuring Guidelines, Alitalia put in place structural measures, as demonstrated by the opening of new routes, which, in the context of aviation services market, constituted the acquisition of a market share, and an unjustified expansion of its operations; (d) the distortive effect of the aid was demonstrated by the opening of new routes, the increased frequency of some flights, and the operation with low load factors on some of those routes. Such a distortive effect risked becoming permanent due to the excessive length of time during which the aid was at the disposal of Alitalia.

4. INFORMATION PROVIDED BY ITALY

4.1. Comments from Italy

4.1.1. Public authority considerations

(78) According to Italy, the initial loan was intended to address urgent management needs of Alitalia and other companies of the group placed under extraordinary administration, that is Cityliner (see recital 41). Those needs included ensuring that Alitalia could continue to participate in the international regulatory systems governing airlines, such as IATA, pending the decision to restructure Alitalia or to sell its assets (see recital 17).

(79) The Italian authorities also added that the initial loan was provided due to the need to avoid service interruption, bearing in mind the social hardship and serious inconvenience to users that such an interruption would entail, infringing, inter alia, the right to territorial continuity within the Italian Republic guaranteed by the Italian Constitution.

(80) Italy justified its claim that Alitalia’s exit would lead to serious disruptions to the air passenger transport sector and society by providing the following data: on 1 May 2017, the total number of passengers who had booked for the period from May 2017 to March 2018 amounted to EUR 4 935 210 (either with a ticket already issued or with a ticket yet to be issued), of which approximately EUR 1,3 million in May and more than half a million during the first 15 days of the month. The total value of the tickets issued for the period from May 2017 to March 2018 was EUR 429 million (of which EUR 125 million related to the month of May 2017 only), while the compensation costs to be paid to passengers booked in the first 15 days of May 2017 pursuant to Regulation (EC) No 261/2004 of the European Parliament and of the Council (41) would have been approximately EUR 268,5 million.

(81) The Italian authorities explained that once Alitalia entered the extraordinary administration the financing was granted pending the preparation and implementation of an EA programme.

(82) The Italian authorities claimed that without the two State loans it would have been difficult to conduct the tender process for the divestment of Alitalia in accordance with the highest standards of openness, non-conditionality and competitiveness. This constituted the precondition for obtaining the best value possible from the assets to be sold, that is divesting Alitalia’s businesses on the best market conditions achievable through a competitive procedure. In its supplementary comments submitted on 25 September 2018, Italy emphasised that the economic logic of the two State loans was to ensure Alitalia’s long-term viability by facilitating the successful completion, within a predetermined period of time, of the competitive tendering procedure for the sale of Alitalia’s assets. That aimed, in essence, at preserving the maximum value of those assets until such a sale was complete.

4.1.2. Concerning the assessment of the two State loans prior to granting

(83) Italy did not submit any evidence that it had carried out an ex-ante assessment of the profitability of the two State loans before granting them. When the Commission asked it to provide any such evidence, Italy merely declared that the combination of the interest rate that applied to the two State loans with the strict binding requirements regarding their repayment ensures a positive result for the lender. Thus, according to Italy, the balance of the financial intervention would certainly be positive for the lender, since the risk taken on by the latter is limited and, in any case, remunerated on market terms.

4.1.2.1. Concerning conformity of the initial loan with market conduct

(84) The Italian authorities claimed that the initial loan was in line with market conditions and therefore fell outside the scope of Article 107(1) TFEU, as it did not constitute aid.

(85) According to the Italian authorities, the initial loan is in line with market conduct due to the specific conditions attached thereto, i.e.: (i) a 6-month EURIBOR interest rate, plus 1 000 basis points in line with the Reference Rate Communication (42); (ii) the mandatory payback within six months of payment, with (iii) priority repayment over any other debts under Alitalia’s extraordinary administration. The interest cost charged was allegedly calculated on the basis of market conditions and parameters, taking full account of the specific circumstances of Alitalia. Since market conditions were applied, the loan conferred no State-funded advantage on Alitalia and cannot therefore constitute an aid measure.

(86) The Italian authorities argued that the risk taken on by the State as a lender – remunerated at market conditions – is practically non-existent in the light of the recognised benefit of priority repayment over any other debts under Alitalia’s extraordinary administration. The Italian authorities claim that it was reasonable to assume that Alitalia’s assets could in any event cover the debts resulting from the initial loan, whatever the outcome of the extraordinary administration procedure.

(87) According to the Italian authorities, the combination of the level of interest charged and the strict repayment terms means that the outcome for the lender, i.e. the end balance of the financial intervention, will certainly be positive. The loan was therefore fully in line with the principle of a private investor in a market economy and there was procedurally no obligation to give the Commission prior notification pursuant to Article 108(2) TFEU.

(88) The Italian authorities also argued that private shareholders, including, in particular, Etihad, were also ready to provide financing to Alitalia within the framework of the Turnaround Plan. More specifically, on 22 December 2016, (i) Alitalia reached an agreement with its own financial creditors for a moratorium, (ii) Alitalia’s shareholders discussed issuing participating equity instruments worth USD 231 million; (iii) [one of Alitalia’s shareholders entered into agreements concerning economic commitments in the relationship between Alitalia’s shareholders]. On 27 December 2016, Etihad also granted Alitalia a subordinated shareholder loan of EUR 100 million. In a note dated 25 March 2019, the Italian authorities also claimed that the two State loans are in line with the amount of the fresh new funding foreseen in Alitalia’s Turnaround Plan.

4.1.2.2. Concerning the additional EUR 300 million loan

(89) The Italian authorities state that their arguments with regard to the initial loan equally apply to the additional EUR 300 million financing, which was provided under the same terms and conditions as the initial loan, taking full account of Alitalia’s specific situation.

(90) The Italian authorities further argue that the additional EUR 300 million loan and the prolongations of the repayment of the EUR 600 million financing in October 2017 were necessary to organise the tender and ensure the sale of Alitalia on the best market conditions achievable. The failure of such a tender would have had punitive effects on the company’s business prospects and would have caused serious harm to all stakeholders. The two State loans were thus closely related to the aim of achieving the long-term viability of the company.

4.1.3. Concerning the Opening Decision

(91) With regard to the Opening Decision, Italy states that the Commission’s assessment (43) of the value of Alitalia’s assets predates Alitalia’s entry into extraordinary administration, and was accordingly not up-to-date at the time of the Italian response (25 May 2018). Italy argues, in that regard, that the changes implemented by the new management of Alitalia led to actions to safeguard revenue, to contain costs and to increase efficiency. In that respect, Italy first contends that the extraordinary commissioners have addressed Alitalia’s financial and managerial problems, by streamlining operations and renegotiating contracts, e.g. achieving a notable reduction in leasing costs (estimated leasing costs of EUR [210-250] million in 2018 compared to EUR [260-340] million in 2017). Italy stresses that, considering those savings and the fact that the sales procedure was on-going, Alitalia’s assets were undervalued.

(92) Furthermore, as part of the special powers granted to them by law, the extraordinary commissioners were empowered, for example, to take steps to recover money owed to Alitalia and to negotiate the settlement of claims with other parties. The value of Alitalia’s assets would therefore have to be revised in light of the revenues obtained and cost cuttings made by the extraordinary commissioners. Italy also claims that the valuation in the non-binding communication submitted by Lufthansa may not have reflected the value of Alitalia’s assets since the bid was for only part of the assets on offer and may reflect certain subjective interests from the bidding party. Accordingly, the valuation for part of the assets could not be used as a proxy for determining the value of all assets.

(93) Italy challenges the Commission’s claim that there was little evidence showing that Italy stood to lose more in the counterfactual scenario where the two State loans were not provided. Italy argues that, since Alitalia is in an insolvency procedure managed by extraordinary commissioners appointed by the government, those commissioners are acting with a public purpose. Italy argues that, although Alitalia is not owned by the State but the extraordinary commissioners are acting with a public purpose, Italy could, therefore, take into account the losses that the State would have incurred were Alitalia to have ceased operating and been liquidated when deciding whether to intervene as a market lender.

(94) Italy further takes issue with the Commission’s observation in recital 64 of the Opening Decision that, as the State was only an indirect minority shareholder, it could not stand to benefit from a better sale price to the same extent as the majority shareholders. Italy contends that, since the proceeds from the sale of the assets are destined for the creditors, accordingly the interest of a wider number of stakeholders, such as creditors, customers, workers and suppliers, need to be taken into account when assessing if the two State loans were made under market conditions.

4.1.4. Concerning the counterfactual scenario to granting the aid

(95) In its supplementary comments submitted on 25 September 2018, Italy set out, in further detail, the consequences on the counterfactual scenario of liquidating Alitalia on 31 December 2017 claiming the following: (a) the State acted as a market economy operator, due to the significant losses it would have had to bear in case of the sale/closure of the company on 31 December 2017, already foreseen on the date of granting of the initial loan. Those losses would have amounted to EUR [more than a billion], essentially due to: (i) costs linked to unemployment borne by the State; (ii) unpaid taxes; (iii) compensation costs due to passengers; (iv) negative spill over effects on suppliers; (b) the two State loans were to address Alitalia’s urgent management needs and to avoid interruption of service, leading potentially to serious societal problems and disruption; (c) the two State loans were in line with the rate for companies with a bad rating with low collateralisation in the Reference Rate Communication. Furthermore the loan enjoyed priority over all other debt; and (d) the original maturity date of the sales process jeopardised the prospect of that process coming to a positive outcome and was thus extended. Consequently, also the original maturity date of the initial loan was extended and its amount was increased by granting the additional EUR 300 million loan.

(96) Italy claimed that its reasoning was wholly in line with point 107 of the Commission Notice on the notion of State aid (44), where it is stated that ‘in the case of an equity or debt intervention in a public undertaking in difficulty, the expected return on such an investment should be compared with the expected return in the counterfactual scenario of the liquidation of the company. In the event that liquidation provides higher gains or lower losses, a prudent market economy operator would choose that option’.

(97) Italy contended that, had Alitalia been closed on 31 December 2017, Alitalia’s employees would have been eligible to claim benefits from the general unemployment fund (‘NASpI’) and the specific solidarity fund for air transport employees (‘FSTA’). Italy claims that the estimated cost of the unemployment payments that the State would have been liable for the staff of the company in the event of closure/winding up would have amounted to EUR [350-800] million, including the FSTA, for the period until 31 December 2018 and to EUR [500-900] million in the event of the extension of FSTA until 31 December 2019. Italy claimed that the unemployment costs would have been similar had Alitalia been closed on 1 May 2017, the day before the company was admitted to the extraordinary administration procedure.

(98) Italy also mentioned that Alitalia’s suppliers would be negatively affected by Alitalia’s liquidation. They provide services, such as handling, customer service/call centres, cleaning, hotels accommodation, logistics and catering, with a total average annual value of EUR [100-300] million.

(99) Further, Italy argues that, since Alitalia is in extraordinary administration, and thus managed by public authority, whose mandate is to restore, sell or liquidate the assets and distribute the proceeds to the creditors, the extraordinary commissioners were acting in the public interest; the discharge of their mandate allows them to protect only creditors’ rights and not those of shareholders.

(100) Moreover, Italy acknowledges the Court’s finding in the Land Burgenland judgment. In paragraph 52 of that judgment the Court held that ‘in order to assess whether the same measure would have been adopted in normal market conditions by a private vendor in a situation as close as possible to that of the State, only the benefits and obligations linked to the situation of the State as shareholder – to the exclusion of those linked to its situation as a public authority – are to be taken into account’ (45).

(101) However, Italy contends that State aid rules cannot be applied in a way precluding Member States from adopting measures which are less costly than possible alternatives, merely because such measures may be inseparable from the State exercising its public prerogative. That approach would end up being economically irrational.

4.1.5. Concerning the compatibility of the aid

(102) Prior to the Opening Decision, the Italian authorities argued that, if the two State loans were to be deemed State aid, they would meet all the compatibility requirements for rescue aid. Alitalia is a firm in difficulty in view of the on-going extraordinary administration procedure (which corresponds to collective insolvency proceedings under the Rescue and Restructuring Guidelines). The Commission noted in the Opening Decision that, since the initial loan was not repaid six months after it was granted, the initial loan cannot be considered compatible as rescue aid, but could only be considered as restructuring aid. Italy, however, did not submit any arguments to claim that the two State loans would be compatible restructuring aid.

(103) Following the Opening Decision, Italy claimed that the two State loans met all the compatibility requirements for rescue aid. As regards, first, the criterion of appropriateness (point 55 of the Rescue and Restructuring Guidelines), Italy argued that the failure to pay back the initial loan within six months does not infringe the appropriateness condition of the rescue aid since those guidelines exempt the aid from being paid back within that timespan if there is a liquidation plan or restructuring plan. Furthermore, Italy argued that the initial loan and the additional EUR 300 million loan must be treated as a single intervention, meaning the six month period would start to run only as from the disbursement of the additional EUR 300 million loan.

(104) Second, as regards proportionality (point 60 of the Rescue and Restructuring Guidelines), Italy argued the two State loans were proportional, as they aimed at covering Alitalia’s financial needs until the completion of the sales procedure and that the amount needed reflected the extraordinary commissioners’ cautious approach to ensure that the Alitalia’s assets could be transferred and not undermine the conditions for the repayment of the two State loans. Italy also provided an updated liquidity plan within the meaning of point 60 of the Rescue and Restructuring Guidelines, which in its view, reflected Alitalia’s liquidity needs taking into account a number of factors including Alitalia’s cash flow from operations, its total net investments, its business characteristics and the risks derived from market fluctuations peculiar to Alitalia.

(105) Lastly, as regards the criterion concerning negative effects on competition and trade between Member States (under Section 3.6 of the Rescue and Restructuring Guidelines), Italy argued that since being placed under extraordinary administration, Alitalia recorded a decrease in the number of passengers and flights, ceased operations on certain long haul, loss-making, routes, increased the fleet’s passenger load factor and achieved significant labour cost savings. Italy also makes reference to the fact that were Alitalia to suddenly stop operations, it would result in negative consequences given the essential role played by Alitalia in the air transport sector in Italy. The two State loans were limited to the minimum to ensure continuity of operations and not allow for Alitalia’s expansion beyond that allowed by the Rescue and Restructuring Guidelines.

4.2. Reports and studies provided by Italy concerning Alitalia

(106) Although Italy has not submitted any ex-ante economic assessment of the two State loans prepared by it prior to them being granted, Italy provided various documents prepared by experts and other entities concerning Alitalia’s economic situation and business operation. This section describes the main documents provided by Italy concerning Alitalia. Some of the documents were prepared prior to when Alitalia entered the extraordinary administration, so before the two State loans were granted (ex-ante), while others were made afterwards (ex-post).

4.2.1. Ex ante studies/documents

4.2.1.1. The Turnaround Plan

(107) The Turnaround Plan was prepared in December 2016, in accordance with the requirements of Section 67 of the Italian Bankruptcy Law, when it was clear to Etihad that Alitalia was on the brink of bankruptcy. The Turnaround Plan included a financial and an industrial plan covering a period from 2017 to 2021 as required by the Italian Bankruptcy Law. It aimed at restoring Alitalia’s viability by 2021 as a result of: (i) redesigning the network and increasing revenue by circa EUR 900 million per annum (46) (notably through an enhancement of the load factor, the development of long haul traffic and ancillary revenues); and (ii) reducing the costs of Alitalia by circa EUR 400 million per annum (cost efficiency measures and reducing Alitalia’s headcount (47) by [X XXX] and the salaries up to [20-40]%). As well as the cost cutting measures, the Turnaround Plan estimated an equity contribution need of around EUR 1,4 billion, partly from non-cash items such as debt conversions but also partly from fresh capital increase, so as to restructure Alitalia and implement a new business plan. According to the Turnaround plan, if that course of action had been pursued, Alitalia would have reached creditworthiness from 2019 onwards.

(108) The plan estimated that the net result of Alitalia would increase from EUR – 458 million in 2016 (pre-closing figures) to EUR + 168 million in 2021, while Alitalia’s EBITDA would increase from EUR – 176 million in 2016 to EUR + 441 million in 2021.

(109) The implementation of the plan required the approval of the trade unions due to the cost reductions affecting the work force. However, the Turnaround Plan was voted down in a referendum by the trade unions in April 2017, preventing the implementation of significant cuts in labour costs. It was the rejection of that plan that resulted in Alitalia being placed in extraordinary administration in May 2017.

4.2.1.2. Review of the Turnaround Plan by Roland Berger and KPMG

(110) At the beginning of 2017, before the referendum, the Turnaround Plan was reviewed by two independent business experts, namely by Roland Berger (on 7 February 2017) and KPMG (15 March 2017) based on the historical trading and the 2016 forecast figures. These experts were commissioned by Alitalia based on an agreed upon scope in order to support the decision making of Alitalia’ shareholders and management. Roland Berger was responsible for the review of the industrial plan included in the Turnaround Plan and KPMG for the financial plan.

(111) Both described the Turnaround Plan as ‘ambitious […] in light of Alitalia’s recent history’ and signalled that it was crucial for all stakeholders, in particular trade unions, to be fully committed to that plan.

(112) KPMG’s review highlights the significant financing needed to sustain the plan over a period of several years, the need for full reliance on the realisation of the assumptions on cost savings and revenue generation, and the need to have all stakeholders (including workers) committed to the plan. KPMG furthermore emphasised the sensitivity of the plan in respect of the financial assumption related to the evolution of the revenue/cash-flow through prepaid ticket sales.

4.2.1.3. Certification Report of the Turnaround Plan by Dr Riccardo Ranalli

(113) Under the Italian Bankruptcy Law, the veracity of the figures provided by Alitalia (reliability) and the feasibility of the Turnaround Plan had to be checked and certified by an independent expert. The purpose of such a review is to ensure that the implementation of the plan will reduce Alitalia’s debt and turn around its finances as a result of the proposed financial measures. That certification was carried out by Dr Riccardo Ranalli, a chartered accountant (48).

(114) Dr Ranalli’s certification report (‘the certification report’) lists the causes of Alitalia’s crisis referred to in the Turnaround Plan (49): (a) the independence of the company [Alitalia] against a backdrop of network carriers that, through the succession of mergers have achieved a critical mass to ensure an adequate level of competition; (b) the large-scale penetration of the domestic market by low-cost carriers compared to other European countries (external cause); (c) a small long-haul market share, despite unfulfilled demand; (d) the inefficient cost structure, which translates into an average CASK (50) of EUR [X.X] (resulting from a small-medium haul CASK of EUR [XX.XX] and a long haul CASK of EUR [X.XX]) compared to the average figures of EUR 5,31 by long haul carriers and EUR 8,2 by network carriers (internal cause); and (e) the constraint on the development of long haul business as a result of the Joint Venture agreements regarding the North American routes (internal cause).

(115) The certification report (dated 28 April 2017) and a comfort letter (15 March 2017) positively certified the Turnaround Plan.

4.2.1.4. The Standstill Agreement

(116) In January 2017 Alitalia, its main shareholder Etihad Investment Holding Company LLC and the financial creditors of Alitalia agreed on a conditional Standstill Agreement. According to that agreement, ‘pending the finalisation of the updated industrial plan and the relevant certification by an independent expert in accordance with Article 76, paragraph 3, point (d) of the Italian Bankruptcy Law (…), the Company [Alitalia] requires time to identify, inter alia, the detailed activities to be carried out under the Industrial plan for the improvement of its equity, financial and commercial condition and to implement the main terms of the Financial Plan’. The Standstill Agreement, amongst others, required Etihad’s granting of EUR 100 million subordinated shareholder loan, which was paid on 27 December 2016.

(117) During the finalisation of the Turnaround Plan, Alitalia approached its financial creditors and requested a moratorium to meet its financial obligations, on the terms and conditions set out in the Standstill Agreement. The Standstill Agreement lasted until 31 March 2017 and included a weekly liquidity plan until the same date, demonstrating that, as a result of the Standstill Agreement and the actions included therein, the liquidity of Alitalia was ensured until 31 March 2017.

4.2.2. Ex-post studies/documents

4.2.2.1. The Leonardo study

(118) The extraordinary commissioners engaged an independent advisor, Leonardo & Co, to estimate the expected sales value of Alitalia’s operating units as described in recital 60. They sought that estimate as the extraordinary commissioners are bound by law not to sell Alitalia below a market benchmark. The study was commissioned on 14 September 2017. On 16 October 2017 Leonardo & Co sent to the three extraordinary commissioners the results of its study (the ‘Leonardo study’).

(119) The Leonardo study dated 16 October 2017 aimed at estimating the sales value of the operating units of Alitalia on 1 May 2017, namely the start of the extraordinary administration. The study examined the value of three possible batches: (i) sale of the aviation business (‘Lotto Aviation’); (ii) sale of the ground handling business (‘Lotto Handling’) and (iii) sale of both batches combined (‘Lotto Unico’ or ‘Single Lot’). The sales value estimate of the Leonardo study is net of the attached liabilities of the assets on sale and excludes the liabilities prior to the extraordinary administration. The valuation methodology used by Leonardo & Co estimates the value of Alitalia with a mixed method combining an asset-based method with a profit-based method. Leonardo & Co considers that method as the most appropriate to estimate the value of a company in economic distress like Alitalia.

(120) As a starting point the book value of the assets in the Leonardo study amounts to around EUR 2,5 billion, which corresponds to the book value of the assets to be transferred under the Single Lot i.e. EUR 2 552 million according to the PriceWaterhouseCoopers (‘PwC’) report. The value of those assets is then corrected by the liabilities attached to the assets and to the operation of Alitalia (mostly payables to suppliers) and by a profit correction. That correction is the difference between the expected profitability of the company over the first two years of the business plan and the average profitability of comparable airlines. Since Alitalia was expected to make losses in the first two years of operation, the profit correction is negative, further reducing the estimated sales value.

(121) To account for the inherent uncertainty in the realisation of the business plan, the Leonardo study considers two scenarios to estimate the possible sale value of Alitalia’s operating units. The ‘inertial scenario’ is drawn up from an inertia point of view, consistent with the 2017 economic and financial situation of Alitalia, and therefore in the absence of growth objectives and typical industrial strategies. The ‘renaissance scenario’ is based on a business plan drawn up from the point of view of discontinuity from the 2017 situation of Alitalia, providing the recovery of market shares and the profitability in the short to medium term, with the aim of enabling the company to regain a central role in the reference market.

(122) The Leonardo study estimates the sales price of the Single Lot in the inertia scenario in the range of EUR 280 to EUR 411 million; and in the renaissance scenario the range of EUR 495 to EUR 626 million. The average of the highest and lowest valuation is equal to EUR 453 million.

4.2.2.2. Financials of the three operating batches for sale by PwC

(123) The extraordinary commissioners contracted PwC to verify the consolidated financials of the Alitalia Group and the carve-out balance sheets of the Aviation, Ground Handling and Single Lot batches on 1 May 2017. Those carve-out balance sheets determined the perimeters of the assets to be transferred in case of the sales of assets of Alitalia and determined which balance sheet items would remain with Alitalia after the sales.

(124) Those verified financials, as exposed in the draft verification report drawn up on 21 September 2017 by PwC, were then used by Leonardo & Co to estimate the sales price of the batches (51).

(125) PwC completed and dated its verification report on 31 October 2017.

4.2.2.3. Prices attached in the bids from Lufthansa, EasyJet and Airport Handling

(126) On 16 October 2017, a number of companies submitted bids for part of Alitalia’s business as part of the tender process (see recital 59), including Airport Handling, EasyJet and Lufthansa. This sub-section summarises their main features.

(127) Airport Handling made a binding bid for Alitalia’s ground handling business, offering EUR [XX.X] million with a top-up up to EUR 6,5 million conditional on achieving some targets.

(128) EasyJet made a binding offer for part of Alitalia’s aviation business excluding maintenance and repair services. The offer only values the short haul activity at EUR [XXX-XXX] million. EasyJet submitted in its offer that it preliminarily estimated at EUR [XXX] million the long haul business, whose takeover depended on an unidentified consortium partner. Therefore, there was a total maximum value by EasyJet of EUR [XXX] million.

(129) The non-binding offer made by Lufthansa considered only part of the Aviation Batch (i.e. [XX] planes out of [XXX] and only […] of the staff) and amounted to EUR [XXX] million (net of capitalised leases).

4.2.3. Financial reports of Alitalia

(130) The most recent published statutory accounts of the Alitalia Group are as of 31 December 2015. No statutory financial statements were prepared for 2016 as Alitalia was put under extraordinary administration prior to the acceptance and publishing of the statutory accounts of 2016. However, the pre-closing and the pro-forma financials for the year of 2016 were available, as well as the reports of the key experts preparing ex-ante or ex-post reports on Alitalia, i.e. KPMG, Roland Berger, Dr Ranalli and PwC. Those experts all relied on the 2016 figures for their analysis. Furthermore, a financial statement was prepared by Alitalia as of 28 February 2017 as required by the Italian bankruptcy law.

(131) During the extraordinary administration procedure, no statutory financial statements were published. However, the website of the extraordinary administration of Alitalia published limited financial figures, mostly focusing on operating EBITDA and cash-flow (no balance sheet), with irregular intervals (52).

(132) Although it appears that, except for 2015, none of those financial reports were audited, there is no indication that the figures materially misrepresent the financial situation of Alitalia. In particular, the 2016 figures were certified by Dr Ranalli as part of the Turnaround plan.

5. ASSESSMENT OF THE AID

5.1. Existence of aid within the meaning of Article 107(1) TFEU

(133) By virtue of Article 107(1) TFEU, ‘save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects the trade between Member States, be incompatible with the internal market’.

(134) It follows that, for a measure to be qualified as State aid within the meaning of Article 107(1) TFEU, the following cumulative criteria must be met: (i) it must be granted by the State and through State resources; (ii) it must confer an advantage upon an undertaking; (iii) it must be selective, i.e. favour certain undertakings or the production of certain goods; and (iv) it must distort or threaten to distort competition and it must affect trade between Member States.

5.1.1. Notion of undertaking

(135) Alitalia is a private company operating in the air transport sector established in Italy. It is an undertaking for the purposes of Article 107(1) TFEU since it carries out economic activities by offering services on a market (53).

5.1.2. State resources and imputability to the State

(136) As has been stated by the Court (54), for measures to be qualified as State aid within the meaning of Article 107(1) TFEU, (a) they have to derive from State resources, either directly or indirectly by any intermediary body acting by virtue of powers conferred on it and (b) they have to be imputable to the State (55).

(137) Since the two State loans result from acts of the Italian Government and the Parliament, they are clearly imputable to the Italian State. In addition, the two State loans were financed from the State budget and were thus clearly granted through State resources.

5.1.3. Selectivity

(138) To be considered State aid, a measure must be selective in that it favours only certain undertakings or the production of certain goods.

(139) The two State loans were granted to a single company, Alitalia. Thus, they were granted on an ad hoc basis to a single company and were not available to other companies active in the Italian air transport sector which are in a comparable legal and factual situation, or in other sectors. No comparable companies were eligible for measures similar to those granted to Alitalia and thus no such companies received a comparable financing. The two State loans therefore are selective.

5.1.4. Advantage

(140) An advantage, within the meaning of Article 107(1) TFEU, is any economic benefit which an undertaking could not have obtained under normal market conditions, that is to say in the absence of State intervention (56).

(141) According to the case law of the Union Courts, economic transactions carried out by public bodies do not confer an advantage on their counterpart, and therefore do not constitute State aid within the meaning of Article 107(1) TFEU, if they are carried out in line with normal market conditions (57). In order to determine whether a transaction has been carried out under those conditions, the Commission applies the Market Economy Operator test (the ‘MEO test’). That test has been developed with regard to different economic transactions. The Commission will first examine whether the MEO test is applicable and, if so, will then apply it to the two State loans.

5.1.4.1. Applicability of the market economy operator test

(142) In the present case, the Commission must examine whether the MEO test is applicable. Should the Commission determine that the MEO test is not applicable to the two State loans, it need not apply that test. The Commission may then simply conclude that Alitalia obtained an economic benefit which it could not have obtained under market conditions, and thus an advantage within the meaning of Article 107(1) TFEU.

(143) Before assessing applicability, however, since there are two State loans (the initial loan and the additional EUR 300 million loan), the Commission must assess whether those loans are separable for the purposes of assessing applicability or whether they constitute a single intervention. If they are separable, each loan would have to be assessed separately, in particular in respect of the applicability of the MEO test. If, by contrast, they were found to constitute a single measure, the Commission need only carry out one single assessment of the two State loans in that respect.

5.1.4.1.1. The two State loans as a single measure

(144) In line with the Commission’s decisional practice, a series of State interventions which take place in relation to the same undertaking in a relatively short period of time, are linked to each other, or were all planned or foreseeable at the time of the first intervention, may be assessed as one intervention. On the other hand, when the later intervention was a result of unforeseen events at the time of the earlier intervention the two measures should normally be assessed separately (58).

(145) When assessing whether the two State loans constitute a single intervention, the Commission takes account of (i) the chronology of the two State loans in question; (ii) their purpose; and (iii) the undertaking’s (financial and risk) situation at the time when the decision to grant each of the two State loans was made (59).

(146) In the Commission’s view, the initial loan and the additional EUR 300 million loan should be considered, for the purpose of assessing applicability, to be a single measure.

(147) In the first place, on the chronology of the loans in question, the two of them were granted in quick succession: the initial loan was granted on 2 May 2017 and then, less than six months later, the additional EUR 300 million loan was granted on 16 October 2017. Moreover, Italy changed the maturity dates of those loans by a series of short prolongations (see recitals 19 and 30) before it finally synchronised and, de facto, merged them into a single measure (see recitals 31 and 32).

(148) In the second place, as is clear from recitals 17 and 19, the two State loans were granted with a specific purpose in mind, namely guaranteeing the continuity of air transport services by Alitalia until the extraordinary commissioners could complete the programme with which they had been invested by the Minister of Economic Development, namely the restructuring of Alitalia or the sale of its assets. They were granted by the Italian State and there was no attempt to seek financing from other sources.

(149) Decree-Law 148/2017 explicitly states that the additional EUR 300 million loan was to be granted as an increase to the initial loan (see recital 19). Furthermore, the financing was described by the Italian authorities as a single measure in the notification to the Commission, where they also explained that the aid was paid in three instalments (60). That description is also confirmed in the subsequent submissions of the Italian authorities (61).

(150) The terms and conditions of the two State loans are identical apart from the amount and the initial duration; moreover, the granting decree of the additional EUR 300 million loan refers to the granting decree of the initial loan, stating that the ‘financing is increased’. The two State loans were, in effect, merged into a single measure as a result of the synchronisation of their maturity dates (see recitals 30, 31 and 32).

(151) In the third place, as regards Alitalia’s financial situation and risk profile at the time when the decision to grant each of the two State loans was taken, they were, in essence, the same. A comparison of the financial situation and risk profile is set out in detail in Section 5.1.4.2. However, for the sake of completeness, the Commission observes that Alitalia’s financial situation and risk profile when the two State loans were granted were as follows: (a) Alitalia was insolvent and under extraordinary administration. Accordingly, nothing changed in terms of the legal regime under which it was operating; (b) the terms and conditions of the two State loans were the same, apart from the loan amount and the maturity dates. This demonstrates that the risk profile was essentially the same from Italy’s point of view; (c) although Alitalia did have EUR 545 million in available cash when the additional EUR 300 million loan was granted, that was mainly cash made available through the initial loan and not, to any significant extent, the result of cost savings or increased revenues. Alitalia was unable to generate positive cash flows to finance its activities and was reliant on external funding to finance its loss-making operations (see recital 228).

(152) Furthermore, when the initial loan was granted, in the light of Alitalia’s projected liquidity needs when it was placed in extraordinary administration, it was foreseeable that further financing would be needed if the sale or restructuring did not take place within six months (see recitals 246 to 248).

(153) In fact, the Commission is of the view that Italy’s unique aim was to provide sufficient financing to keep Alitalia operating until its assets could be sold. This view is based on the following elements: (a) the statements by various government ministers (see recitals 51 et seq.); (b) Italy’s arguments confirming that Alitalia was systemically important to the entire air transport sector of Italy to the effect that the government viewed it as too big to fail; (c) the quasi-automatic coverage of Alitalia’s cash needs and the automatic prolongation of maturity dates of the two State loans and extension of the sales proceedings; (d) the fact that, since the initial loan was granted, Italy has never explicitly acted in such a manner as to recoup its investment or even entertained the possibility; (e) Italy has not sought early repayment of the two State loans. Nor has it triggered liquidation or sought, at the very least, not to prolong the maturity of the two State loans in the absence of any study assessing the change in the likelihood of repayment of the two State loans when those loans were to be repaid; (f) interest due on the two State loans at their maturity date has not been paid as a result of systematic postponement of the maturity of the two State loans and, indeed it ceased accruing from 31 May 2019.

(154) Accordingly, the Commission considers the two State loans to constitute a single measure for the purposes of this decision.

(155) The Commission will examine applicability on two grounds, assessing (i) whether Italy submitted sufficient ex-ante evidence showing that it acted as an economic operator and (ii) whether the State acted as a public authority rather than as economic operator when granting the two State loans.

(156) Notwithstanding the abovementioned conclusion that the two State loans are not separable, even if the two State loans were treated as two separate measures the Commission’s analysis of applicability set out below would apply mutatis mutandis.

5.1.4.1.2. Italy acted as public authority and not as a market economy operator

(157) The Commission considers that the MEO test is not applicable in the present case. Indeed, on the basis of all available evidence, Italy has acted steadfastly in its capacity as public authority to save Alitalia from bankruptcy and keep it operating.

(158) As a preliminary remark, the Commission recalls that the Court has considered that the applicability of the MEO test ultimately depends on a State having conferred, in its capacity as shareholder and not in its capacity as a public authority, an economic advantage to an undertaking belonging to that State (62). Interventions by the State which are intended to honour its obligations as a public authority cannot be compared to those of a private investor in a market economy (63).

(159) In order to determine whether the two State loans granted by the State represent the exercise of State authority or whether they are the consequence of obligations that the State must assume as shareholder, the Commission will examine not only the form of those loans but also (i) their nature and subject matter, (ii) the context in which they are taken, (iii) the objective pursued, and (iv) the rules to which the two State loans are subject.

(160) If the State’s intervention, having regard to its nature and subject matter and taking into account the objective pursued, is not an investment which may be made by a private investor, it would constitute intervention by the State as a public authority, thus precluding application of the MEO test (64).

The nature and subject matter of the measure

(161) As described in Section 2.1, the measure in question consisted of the two State loans granted by Italy to Alitalia on 2 May 2017 and 16 October 2017, respectively.

The context of the measure

(162) From the outset, the State acted consistently and clearly in its capacity as public authority to save Alitalia from being liquidated, a fact also acknowledged in public statements by various government ministers (see Section 2.5), and not as a shareholder investing in a company or as a creditor.

(163) Alitalia has been continuously and heavily loss-making in the period since being acquired by CAI in 2008. Alitalia’s shareholders’ attempts to put Alitalia back on track through the Turnaround Plan failed because of workers’ rejection of that plan on 26 April 2017, which led to it being placed under extraordinary administration (see recitals 41 et seq.). Alitalia has continued to lose money while in extraordinary administration.

(164) After the rejection of the Turnaround Plan but prior to being placed under extraordinary administration, there is no evidence that any investor was willing to step in and acquire Alitalia as a going concern, even for a nominal price. Nor is there any evidence that financial institutions were ready to provide significant loan facilities to allow sufficient liquidity for it to keep operating.

(165) When the two State loans were granted, Alitalia was an undertaking in difficulty within the meaning of the Rescue and Restructuring Guidelines and had little prospect of becoming profitable in the near to medium term (see recitals 41, 66 and 218 to 229).

The objective pursued

(166) The express purpose of putting Alitalia under extraordinary administration was to ensure the continuity of transport services provided by Alitalia and to preserve the value of its assets.

(167) As an insolvent company, Alitalia was, in essence, frozen out of the credit markets and, due to its immediate and longer term liquidity problems, was dependent on the Italian State, which provided the two State loans.

(168) As described in detail in Section 2, the initial loan was granted with the principal aim of avoiding interruption of the service provided by Alitalia, allowing it to maintain domestic and international flight connections, thus preventing both social hardships and serious inconvenience for users. Italy also claimed that such an interruption would entail infringing, inter alia, the right to territorial continuity within Italy guaranteed by the Italian Constitution. The additional EUR 300 million loan was granted for the same reason, as well as to facilitate the divestiture of Alitalia’s assets. The objective of placing of Alitalia under extraordinary administration and the objective of the two State loans appear not to be different in essence.

(169) This assessment is further supported by the public declarations of government ministers rendered both before the initial loan and the EUR 300 million loan were granted (see Section 2.5), namely that the government’s main concern was preventing the sudden interruption of air transport services and the direct and indirect repercussions entailed by such an exit. They include the effect on Italy’s economy and the alleged aim of preventing further losses to the taxpayer. According to those statements, the purpose was to give the extraordinary commissioners breathing room to find a buyer. That goal is reflected in the relevant legislation granting the two State loans and in Italy’s own submissions (see recital 78 et seq.), according to which those loans were needed for Alitalia’s management needs, to avoid the interruption of services and the social hardship and inconvenience entailed.

(170) The contemporaneous statements from members of the Italian government at the material time (see Section 2.5) support the view that the grounds on which Italy granted the two State loans were not those of a market economy operator. Instead, the objective underlying the decision to grant the two State loans were that ‘stopping airplanes on the ground is not imaginable because the connections would be compromised and the travellers would be hurt’ (65), that ‘We cannot [let it] fail from morning to night because we would no longer have connections from one part of the country to the other’ (66) and the ‘putting the planes on the ground from morning to night would cost Italian taxpayers much more’ (67).

(171) As set out in Section 4.1, Italy explained in detail the disruption that would be occasioned by Alitalia exiting the market, citing, in that respect, the number of passengers who had booked and the number of tickets which had been issued.

(172) Having examined the above elements, the Commission considers that the main purpose of the two State loans was to ensure that Alitalia kept operating for reasons of public policy rather than the financial interests of the State as a market economy operator. As such, any prospect that the State would make profit in connection with the two State loans, even in the long term, if that could be demonstrated, was merely incidental to the decision to grant the two State loans.

(173) Furthermore, the Court has held that ensuring the continuity of transport services provided by an undertaking is a consideration which a private investor would not take into account (68).

(174) In addition, the maturity dates of the two State loans were regularly postponed and, at the same time, the State also postponed the obligation of payment of interest by Alitalia to those new maturity dates. As a result of the Growth Decree-Law, interest ceased to accrue on the two State loans from 31 May 2019. This moreover shows that the interest rate value of 6-month Euribor + 10 % which Italy argues demonstrated that it acted as an MEO (see recital 95) is merely artificial, as the State – as a lender – never received remuneration for either its liquidity cost or the credit risk related to Alitalia that a market economy lender would have sought to cover. This together with the absence of an ex-ante study submitted by Italy showing the State had a financial interest to grant those prolongations and payment of interest relief instead of going forward with the counter-factual scenario shows that the State acted in its public power remit as regards Alitalia. That behaviour, namely granting those postponements without specific ex-ante study, failing to claim payment of the interest, eventually putting an end to the accrual of that interest from 31 May 2019, is not in line with that of an MEO but demonstrates the interest of a public authority to maintain the continuity of transport service provided by Alitalia.

The rules to which the measure is subject

(175) The two State loans at issue are sui generis and ad hoc. Specific decree-laws were adopted to provide for the grant of those loans and their subsequent prolongations and de facto merging into a single measure. The two State loans were financed from the budget allocated to the Minister of Economic Development. Furthermore, specific ministerial decrees provided for the disbursement of those loans.

(176) The money for those loans accordingly came from the general State budget.

Conclusion

(177) In conclusion, it must be noted that the measure presents, in view of its nature and subject matter, the context in which it was taken, its objective and the rules to which it is subject, the characteristics of an act within the prerogatives of public authority of Italy. Consequently, the private investor test cannot be applied to it.

5.1.4.1.3. Lack of a MEO test by Italy

(178) The Court has held that ‘the applicability of the private investor test ultimately depends […] on the Member State concerned having conferred, in its capacity as shareholder and not in its capacity as public authority, an economic advantage on an undertaking belonging to it’ (69).

(179) Where a Member State relies on the MEO test during the administrative procedure, that Member State ‘[m]ust establish unequivocally and on the basis of objective, verifiable and contemporaneous evidence that the measure implemented falls to be ascribed to the State acting as shareholder and is based on the requisite prior economic evaluations’ (70). That evidence must show clearly that the Member State concerned took the decision to make an investment before or at the same time as conferring the economic advantage based on a reasoned assessment demonstrating a market rate of return as a result of the measure actually implemented.

(180) Furthermore, ‘in order to assess whether the same measure would have been adopted in normal market conditions by a private investor in a situation as similar as possible to that of the State, only the benefits and obligations linked to the situation of the State as shareholder – to the exclusion of those linked to its situation as a public authority – are to be taken into account’ (71). It follows that the roles of the State as shareholder of an undertaking, on the one hand, and of the State acting as a public authority, on the other, must be distinguished.

(181) In that regard, it may be necessary to produce evidence showing that the decision is based on economic evaluations comparable to those which, in the circumstances, a rational private investor in a situation as close as possible to that of the Member State would have had carried out, before making the investment, in order to determine its future profitability.

(182) As recalled by the General Court (72), ‘whilst it is for the Commission to apply the private investor test and to request the Member State concerned to provide it with all relevant information to that end, it is the responsibility of that Member State or […] the public undertaking concerned to provide evidence showing that it conducted a prior economic evaluation of the profitability of the measure in question, comparable to that which a private investor would have had carried out in a similar situation’.

(183) The Court has further held that ‘for the purposes of showing that, before or at the same time as conferring the advantage, the Member State took that decision as a shareholder, it is not enough to rely on economic evaluations made after the advantage was conferred, on a retrospective finding that the investment made by the Member State concerned was actually profitable, or on subsequent justifications of the course of action actually chosen’ (73).

(184) Italy has failed to meet the minimal evidentiary standard for demonstrating that the MEO test is applicable in the present case.

(185) As noted in recital 83, despite the Commission’s repeated requests, Italy failed to submit any documentary evidence that it had carried out an assessment prior to granting the two State loans of the potential return on investment of those loans. Nor did it submit its assessment of the likelihood of the repayment together with the associated interest from Alitalia’s own resources or from the sales proceeds of Alitalia itself, and of the risk of non-repayment. This is true as regards both the initial loan and the additional EUR 300 million loan.

(186) Although, as pointed out in Section 4.2, Italy has submitted various reports and information about Alitalia available before the two State loans were granted, prepared for purposes other than the economic assessment prior to the granting of the two State loans, those reports and information do not even demonstrate the mere likelihood of repayment, nor meet the standard laid down by the Union Courts of acceptable evidence of an ex-ante evaluation of the profitability of the two State loans.

(187) Furthermore, the Italian authorities were not able to prove the existence of a document, drawn up before or contemporaneously to the decision to grant either loan, which would constitute a business plan, a prof