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Ryanair Loses EU Court Challenge Over Alitalia Rescue Loan

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March 28 (Bloomberg) -- Ryanair Holdings Plc lost a court challenge that may have forced Alitalia SpA’s owners to repay a 300 million-euro ($401 million) loan from the Italian government.

The European Union General Court dismissed Ryanair’s case and confirmed the European Commission’s approval of the sale of Alitalia’s main assets to Compagnia Aerea Italiana, a group of Italian investors, after the airline’s 2008 bankruptcy, according to a statement from the Luxembourg-based tribunal.

CAI, including Intesa Sanpaolo SpA and Atlantia SpA, wasn’t required to repay the state loan that the EU said was illegal aid, the court confirmed. Air France-KLM Group, Europe’s biggest airline, bought 25 percent of Alitalia from CAI in 2009.

“The sale did not have the effect of circumventing the obligation to recover the aid or of granting aid to the buyers of Alitalia,” the court ruled.

Ryanair, based in Dublin, said it will appeal the ruling.

“Today’s decision allows Alitalia and CAI to avoid repaying 300 million euros of state aid, which the EU Commission has already -- in 2008 -- ruled to be illegal,” Stephen McNamara, a Ryanair spokesman, said in an e-mailed statement. “This highlights the commission’s bias towards flag-carrier airlines, who repeatedly receive illegal state aid but never have to repay it.”

Not Liable

Alitalia said in a statement that it isn’t liable for any of the aid because it isn’t seen as a legal successor to the airline that sought bankruptcy protection. It also said it paid the market price for the carrier’s assets.

EU regulators previously said that new investors aren’t responsible for paying back illegal state aid as long as they purchase the assets at market price.

Ryanair partly won a court challenge last year over the commission’s handling of complaints by the company against alleged unlawful state aid by Italy to a number of competitors including Alitalia. Ryanair has also sued regulators for failing to investigate government aid to Alitalia.

The case is T-123/09 Ryanair v. Commission.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

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