BA Call to Reject Alitalia Rescue

19th Jul 2004

British Airways has called on the European Commission to reject an E400 million (£266 million sterling) rescue package from the Italian government for Alitalia.

EU state aid law says no rescue or restructuring aid can be given if a company has already received aid within ten years unless there are ‘exceptional or unforeseeable’ circumstances.

Alitalia was given L2750 billion (E1.4 billion or £930 million sterling) for a restructuring plan completed in December 2000. Now it has asked for another state handout in the form of a loan guarantee of E400 million.

The appeal for aid comes after Alitalia recently:

á Increased capacity from Malpensa airport by 16 per cent and from Fiumicino by 13 per cent - one of the highest increases in the industry.
á Plans for further substantial expansion of capacity, particularly on its longhaul network and routes into the UK.
á Took delivery of the first of six new Embraer 170 jets and is reported to be adding three new Boeing 767s next year and two Boeing 777s in 2006 as part of an expansion of it long haul operations.
á Bought Gandalf Airlines and 135 slots for E7 million (£4.7 million) and is spending substantially on marketing.


“These are not the actions of an airline going bust. If they were, they would be cutting back not expanding; they would be rationalising their network and reducing their fleet not growing it, ” said British Airways director of government and industry affairs Andrew Cahn.

British Airways reduced its manpower by 13,082 and took £1 billion in costs out of its business during its Future Size and Shape recovery programme during the last two years.

If the rescue aid is granted, British Airways has asked for a liquidation plan to be submitted within six months and proof that the State guarantee has been terminated.

It has also asked the commission to ensure Alitalia is not permitted to expand on any long haul routes or add any new routes.


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