The Italian government is ready to follow up emergency aid for Alitalia by injecting hundreds of millions of euros of loans into its struggling steel industry if Rome cannot find a private sector solution for a dual industrial crisis that has shaken its fragile coalition government.
Stefano Patuanelli, minister for economic development, said in an interview with the Financial Times that Italy was prepared to intervene if necessary in its Ilva steel works with funds that would be likely to place Rome under further scrutiny from Brussels over possible illegal state aid to Italian companies.
Last year the EU competition commission opened an investigation into whether Italy’s loans to Alitalia, the national airline, were in breach of state aid rules but has not yet ruled on the issue.
Together Alitalia and Ilva employ more than 22,000 people and Italy’s coalition government has struggled to balance its desire to protect these jobs with its need to allow for a restructuring that would attract reluctant foreign investment into the two struggling companies. Last week Rome approved an injection of a further €400m into Alitalia after no private sector bidders emerged to take over the airline.
The Ilva crisis has inflicted political damage on Rome’s delicate coalition government made up of the once bitter rivals of the Five Star Movement and the centre-left Democratic party, with both parties suffering in opinion polls as they grapple with the issue.
Mr Patuanelli, a member of the Five Star Movement which in opposition had pledged to close the Ilva plant, said he would prefer if Rome could reach an agreement with ArcelorMittal, the current owner of Ilva. The steel giant has said it is prepared to leave Italy after being stripped of legal protections for environmental liabilities that it argues could leave it facing large fines.
ArcelorMittal, which awaits the result of a court hearing on its exit from the investment, has said it could still reach an agreement with the government to stay in Italy. Mr Patuanelli has said that ArcelorMittal must restructure the plant to make it more environmentally friendly and protect Italy’s steel sector. “The preferred solution is for ArcelorMittal to continue in Italy, but it is not a solution that we will accept at all costs,” he said. “In the event that we cannot find a meeting point, for one reason or another, the government is ready to do its part, at least for a transition that may last a few months, but this is not even plan B, it is plan D.”
Mr Patuanelli said that one solution would be for the Italian state to co-invest in Ilva with a private investor, that could be ArcelorMittal if an agreement was reached. “We are very willing to work with foreign investors, but there must be a step on their part in our direction,” he said.
Mr Patuanelli said Rome had been in close contact with the office of Margrethe Vestager, EU competition commissioner, to discuss the €900m in loans it had made to Alitalia after Etihad airlines abandoned the carrier in 2017.
“We are not providing [state] aid to the [Alitalia airline], but for the management of a sale process that unfortunately has taken a very long time, because the market has not shown interest in the national airline,” he said. Several airlines, including Germany’s Lufthansa, the UK’s easyJet and Delta of the US, have looked at investing in Alitalia this year but decided against making an offer.
The minister said that the Italian government was only putting more money into Alitalia because it believed that the company would eventually recover and the state would be repaid. “If I thought that Alitalia had no hope, and that it will always be terminally ill, I would be the first to pull the plug,” he said.
Analysts have argued that Alitalia will never be able to make a profit in the cut-throat European airline sector unless it reduces its high cost base and staffing levels, but Italian trade unions have repeatedly threatened strike action against further cuts. “The important thing is that in the end this company can be put back on the market through a transfer [into the private sector], and that from this you can also recover part of the assets we have invested, but it is not an easy operation,” he said. “Liquidation is absolutely not an option.”
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December 08, 2019 at 06:07PM
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Italy poised to give emergency aid to steel industry - Financial Times
"steel" - Google News
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