The European Commission said on Thursday it would tell Italy it had doubts over the legality of Rome's plan for an emergency loan to keep struggling airline Alitalia afloat, as rival airlines also voiced opposition.
The Italian government decided on Tuesday to give Alitalia the EUR300 million euro (USD$473 million) loan to keep it flying until a new buyer is found, after Air France-KLM pulled out of a deal this week.
EU rules would prevent Italy from lending Alitalia any money unless Rome took the same approach a private investor would in assessing the risk and setting the interest rate.
"State aid or no state aid -- that is the question," a Commission spokesman told a regular briefing. "If state aid, then it should not be paid out before it is authorized."
Italy is also likely to meet forceful opposition from Alitalia's rival European airlines.
Irish budget carrier Ryanair said the plan was unlawful and it would make a formal complaint to the EU.
"This latest bailout makes a mockery of EU state aid rules," said Ryanair's head of legal affairs, Jim Callaghan. "Propping up an inefficient national airline, which would have gone bankrupt long ago is simply illegal."
A British Airways spokesman said, "We will be watching closely to ensure that EU guidelines on state aid are rigidly adhered to."
Alitalia bleeds more than a million euros a day and the loan is expected to stave off bankruptcy, but the European Commission allows state aid to companies only under strict conditions.
The Commission will contact Italy in the next few days expressing doubts about the loan and asking for clarification, said a spokesman for EU Transport Commissioner Jacques Barrot.
"We have doubts on the nature of the measure and we want to understand if this is a commercial operation as the Italian authorities claim," he said.
Ryanair questioned whether the EU was likely to act, however.
"The Commission has still failed to take any action on Ryanair's three-year-old state aid complaints about Alitalia, Air France, Lufthansa, Olympic and Volare," Callaghan said.
