Struggling carrier Alitalia will have to pay back a 300 million euro ($382 million) loan it received from the Italian government after it was judged to constitute "illegal state aid" by the European Commission.
Dozens fo flights have been disrupted by striking pilots, flight attendants and ground staff
The so-called "bridge loan" was granted by the previous government of Prime Minister Romano Prodi on April 22 as a means of ensuring the airline's short-term survival amid falling passenger numbers and soaring debts.
The company, which is partly owned by the state, is currently being sold to a consortium of private investors called Compagnia Aerea Italiana (CAI).
The European Union's executive gave its conditional approval to the company's privatization process on Wednesday, Nov. 12, but insisted that any asset sale should be done at "market prices."
A new, leaner Alitalia
Exactly how the old airline will pay back the loan remains unclear
"The commission considers that if the sale of assets is done at market prices, it will not involve state aid," said European Transport Commissioner Antonio Tajani. "I am convinced that a new, more dynamic air transport market will be able to develop in Italy. This process will lead to the emergence of a private airline, smaller in size but more efficient."
Tajani said the commission would set up an independent trustee charged with ensuring that the sale follows EU rules.
The commissioner also noted that the 300-million-euro loan would have to be paid back by the old Alitalia, and not by the CAI consortium.
"There is discontinuity between the old Alitalia and the new CAI," said Tajani, noting that the new, leaner carrier will employ 12,500 people, compared to today's 17,000.
Meanwhile, Alitalia pilots, flight attendants and ground staff were staging a second straight day of wildcat strikes to protest what they say is CAI's breach of the employment terms it had agreed to when negotiating its bid.
The walkout has forced dozens of flights to be either cancelled or delayed.