Tajani Vows Neutrality on Alitalia, Refuses Recusal

By Jonathan Stearns

June 17 (Bloomberg) — Antonio Tajani, an Italian who is the European Union’s new transport chief, pledged to act forcefully in leading an EU probe into Italy’s rescue loan for flag carrier Alitalia SpA as he fended off questions about his impartiality.

Tajani’s promise comes less than a week after the European Commission began an in-depth inquiry into the legality of Italy’s 300 million-euro ($464 million) loan to the unprofitable airline. The commission, the 27-nation EU’s regulatory arm, faces demands from other airlines such as British Airways Plc to reject the aid as being in breach of European rules on fair competition.

“I will be under no national influence,” Tajani, an ally of Italian Prime Minister Silvio Berlusconi, told a European Parliament confirmation hearing yesterday evening in Strasbourg, France. “I will make sure the EU treaties are respected.”

Making the 54-year-old Tajani European transport commissioner tests the credibility of EU regulators because of the top-level political efforts in Italy to save Alitalia and the rarity of national carriers in Europe going bankrupt. The Parliament is due to vote on Tajani’s new role tomorrow.

Former Italian Premier Romano Prodi approved the financial lifeline to Alitalia in April after Air France-KLM Group, Europe’s biggest airline, pulled out of a takeover bid. Berlusconi pledged to put together a group of Italian investors to buy Alitalia, in which Italy has a 49.9 percent stake.

Transport Post

Commission President Jose Barroso assigned Tajani to the transport post as part of a shuffle under which France’s Jacques Barrot took over the job of justice commissioner vacated by Franco Frattini when he returned to Italy to become foreign minister in Berlusconi’s government. Each EU government appoints one person to the commission, the president of which is responsible for assigning the jobs.

“I will do my very best,” said Tajani, who has worked as a member of the EU Parliament, a journalist and an air-traffic controller. “I will act independently.”

The Parliament’s transport committee, which organized the hearing that also addressed road, maritime and rail policies, will recommend that the full 785-seat assembly back Tajani, said Georg Jarzembowski, a German member who was among the lawmakers that questioned the new commissioner about the Alitalia case.

In early May, when he was still transport commissioner, Barrot stepped up threats to reject the loan to Alitalia. Barrot said the financial weakness of the carrier, which that month reported a wider first-quarter pretax loss of 215 million euros, raised doubts about the loan’s compatibility with EU rules meant to prevent distortions of competition as a result of government cash injections in companies.

Commercial Terms

EU rules require Italy to prove its loan was offered on commercial terms to win approval from the commission, which has waged a years-long battle against the Greek government over aid to Olympic Airlines SA and its predecessor, Olympic Airways.

Tajani pledged to treat all state-aid cases in a neutral way, saying “there are no differences between Alitalia, Olympic Airlines and any other airline” when it comes to applying EU law.

He also rejected the idea of recusing himself from the Alitalia case. Tajani said he has no economic interest in the carrier and European commissioners must regularly take decisions affecting their home country.

Italian Finance Minister Giulio Tremonti has defended the government’s steps to keep Alitalia in business, arguing that aid is necessary to achieve the goal of an eventual sale. The government and the company have named bank Intesa Sanpaolo SpA to advise on the sale.

Government Subsidies

In 2001, the commission hastened the bankruptcy of Belgium’s Sabena SA — the first collapse of a major European airline — by restricting government subsidies. That decision was led by the late Loyola de Palacio, a Spaniard who was EU transport commissioner at the time.

Alitalia won EU permission to receive Italian government aid in 2001, making the carrier ineligible for further handouts until 2011 under European rules. The commission approved a recapitalization plan for the airline in 2005 after concluding that there was no state aid involved.

The Brussels-based commission is due to complete its current probe within 18 months.

To contact the reporter on this story: Jonathan Stearns in Strasbourg, France at jstearns2@bloomberg.net

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