Cleary Gottlieb won EC clearance of the restructuring plan for former Italian flag carrier Alitalia when the European Commission decided that neither Alitalia’s planned €1.2 billion capital increase nor the proposed €216 million investment by public holding company Fintecna in Alitalia Servizi would constitute state aid. Alitalia Servizi is a newly-created Alitalia subsidiary that will carry out maintenance, ground-handling and “shared services” activities. Cleary Gottlieb had previously won Commission approval of rescue aid for Alitalia in the form of a €400 million bridge loan. The loan was intended to facilitate the restructuring of the company without additional State assistance, which, according to the Commission, would have been prohibited by the “one time, last time” principle.
The Commission took the view that Italy’s conduct would satisfy the “market economy investor test” because Deutsche Bank functionally guaranteed an effective majority private sector involvement in the future recapitalization of Alitalia, and the Italian government’s participation would occur on the same terms available to the private investors. The Commission also found that, given profitability and characteristics of its investment, Fintecna would realize sufficient returns to be viewed as a “prudent investor” rather than a vehicle of state assistance, and that Alitalia Servizi would have market-based commercial ties with the air carrier.