Page last updated at 10:03 GMT, Wednesday, 9 July 2008 11:03 UK

EU court rules against Alitalia

Alitalia plane
The Italian government wants Alitalia to have a secure future

The European Court of Justice has rejected an appeal by Alitalia against the European Commission in a long-running inquiry into Italian state aid.

The struggling airline had challenged conditions set by the commission in 2001 for the use of state aid in restructuring the company.

The latest court ruling does not impose any new conditions on Alitalia and the commission considers the case settled.

Large debts and fuel costs have made Alitalia's future precarious.

A statement released on Wednesday said "the Court of First Instance dismisses Alitalia's action and confirms that the commission's decision of 2001 is valid".

It said the court "confirms the validity of each of the conditions imposed on Alitalia" by the commission.

Among the conditions set by the commission were: a requirement that the Italian authorities act as a normal shareholder; that the cash injection be used only for restructuring Alitalia and not for expanding the business; that Alitalia sell its holding in the Hungarian airline Malev; and that the state aid take the form of a one-off payment.

In June this year the commission said it would scrutinise a 300m euro ($473m; 239m) Italian government loan that Alitalia received in April, which enabled it to keep operating.

Italian ministers said the financial lifeline gave them time to try to find a buyer for the business.

Air France-KLM withdrew a bid in April, throwing Alitalia's future into doubt.

Brussels to study Alitalia loan
11 Jun 08 |  Business
Bid talk freezes Alitalia shares
04 Jun 08 |  Business
Alitalia calls for urgent support
28 May 08 |  Business
Alitalia stalls annual accounts
26 May 08 |  Business
Berlusconi vows to save Alitalia
13 May 08 |  Business

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