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Ryanair loses legal fight over €300m Alitalia loan

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RYANAIR has lost a second major battle with Brussels within a week after the EU's general court ruled against it in a row over the Italian government's €300m cash injection into Alitalia.

Ryanair had taken a case against the European Commission after the Italian government's decision to funnel the money into Alitalia as it headed for collapse. In 2006, the Italian government decided to sell its near 50pc stake in Alitalia after a number of failed efforts to improve the loss-making airline's financial position.

In 2008, the government advanced Alitalia a €300m loan and allowed it to count that money as capital.

Illegal

The airline was placed in administration and a bid was received for the airline by a consortium called Compagnia Aerea Italiana (CAI). It consisted of Italy's second-biggest bank, Intesa Sanpaolo, and the country's biggest toll-road operator, Atlantia.

The planned sale price of Alitalia was verified by a bank hired by the administrator.

But the European Commission then investigated the €300m payment and ruled that it constituted illegal state aid and ordered it repaid. However, in a second decision, the Commission said that the €300m didn't constitute the payment of state aid to Alitalia's buyers, provided a fair market price was being achieved under the sale -- and so they weren't liable to repay it. Ryanair appealed those decisions.

Air France-KLM, which had been involved in fraught negotiations to buy a stake in Alitalia in 2008, eventually acquired a 25pc holding from CAI in 2009.

Yesterday, the European Union's General Court dismissed Ryanair's action, saying the Commission ensured there were no sale clauses that would discriminate against international buyers.

Last week, Ryanair effectively lost a test case related to its duty and care requirements to passengers in the event of extraordinary circumstances, such as future volcanic eruptions. The Advocate General of the European Court of Justice said airlines should continue to have to fork out for such costs when such events arise.

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