Italy's government has approved a bridge loan of €600 million ($655 million) for the embattled flag-carrier Alitalia, as the airline prepared to enter extraordinary administration.
The Italian council of ministers says it has approved the financing for six months, an urgent measure aimed at enabling the beleaguered carrier to maintain operations.
Alitalia's shareholders opted to file for administration on 2 May after the failure by workers to support extensive restructuring measures for the loss-making airline.
The council of ministers says the interest-bearing loan from the economic development ministry will be granted within five days of the opening of administration procedures for Alitalia.
It adds that the loan is being granted after consideration of the "social difficulties" and "serious inconvenience" which would be caused if Alitalia's operations – including those covering public service obligation routes – collapsed.
The council stresses that the loan is being granted "in compliance" with European Union regulations on state aid for rescuing companies in difficulty. It adds that the loan will have to be paid back "within six months of its disbursement".
Etihad Airways, which holds 49% of Alitalia and has invested heavily in the Italian carrier, says it is "disappointed" that the airline had been forced into administration.
"We have done all we could to support Alitalia, as a minority shareholder, but it is clear this business requires fundamental and far-reaching restructuring to survive and grow in future," says Etihad Aviation Group chief James Hogan.
He claims that Alitalia's performance had improved during the initial period of Etihad's involvement, but that the airline has been subjected to greater pressures as a result of low-cost airline competition and a decline in tourism demand.
These circumstances have required "deeper change" for the airline, says Hogan, but he adds: "Without the support of all stakeholders for that restructuring, we are not prepared to continue to invest.
"We therefore support the necessary decision of the Alitalia board to apply for extraordinary administration."
Source: Cirium Dashboard
