Page last updated at 13:00 GMT, Tuesday, 13 May 2008 14:00 UK

Berlusconi vows to save Alitalia

Alitalia plane
Alitalia is undergoing a period of severe turbulence

Italian prime minister Silvio Berlusconi has insisted the country's national airline, Alitalia, will pull through its financial crisis.

The carrier would not be nationalised or sold off cheaply, but saved with "the financial support" of Italian firms, Mr Berlusconi pledged.

Alitalia needed a 300m-euro ($463m; 238m) loan from the previous prime minister after a takeover collapsed.

However, the EU has raised concerns that the loan constituted state aid.

The European Commission has agreed to give Mr Berlusconi's new government until the end of May to provide clarification about the nature of the loan.

Under EU law, member governments are forbidden from funding struggling companies in a way that could give them an unfair advantage over rivals, except under exceptional circumstances.

Alitalia has had state bailouts before and could be taken to court if Brussels decides the 300m-euro loan constitutes state aid.

Outlook

Alitalia's future has been hanging in the balance after Air France-KLM scrapped its takeover bid amid opposition from unions last month.

During his election campaign, Mr Berlusconi said that there was a good chance of an all-Italian consortium coming in for the carrier.

He had also raised the idea of re-nationalising the airline as an alternative to selling off the state's 49.9% holding.

However, the European Commission has warned against this.


SEE ALSO
EU presses Italy on Alitalia loan
24 Apr 08 |  Business
Alitalia loan stirs rescue hopes
23 Apr 08 |  Business
Air France scraps Alitalia bid
21 Apr 08 |  Business
'Short term' survival at Alitalia
08 Apr 08 |  Business
Union threatens Alitalia takeover
31 Mar 08 |  Business

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