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29/09/2016

Parliament approves Alitalia request for EU aid fund

Social Europe & Jobs

Parliament approves Alitalia request for EU aid fund

Alitalia have at least one loyal customer; the papal plane, "Shepherd One".

[Alitalia/Twitter]

The European Parliament has approved a request to use the European Globalisation Adjustment Fund (EGF) to help ex-Alitalia employees. EurActiv Italy reports.

In line with the European Commission’s proposal and the Committee on Budgets approval, the European Parliament has authorised funds from the EGF in order to support 1,249 workers who were made redundant by the Italian airline, following its privatisation in 2009.

Around 10,000 employees were made redundant five years ago, 850 of which were airline pilots.

Layoffs were made inevitable by Alitalia’s declining share of the market, and a decrease in passenger numbers, caused by the economic crisis and rising fuel prices.

At the beginning of the year, Etihad Airways bought a 49% stake in Alitalia in a deal worth €560 million, after years of loss making. The deal included debt restructuring and job losses.

>>Read: Alitalia request for EGF funds approved

The Etihad-Alitalia deal was approved on the condition that slots be offered on the Rome-Belgrade route, to ease competition concerns, as Etihad also has investments tied up in Air Serbia.

Despite increasing tensions due to Gulf airlines’ competition, air transport is now up in every member state, with almost 880 million passengers carried last year in Europe alone, up 16.9% since 2009.

On Monday (5 October), two Air France managers were attacked by angry employees protesting against further layoffs and cuts. Criminal proceedings against the assailants have since been opened.

Transport Commissioner told EurActiv that aviation will be crucial in helping to achieve the “priorities of the Juncker Commission” and that the Commission will strive to “enhance connectivity and competitiveness” in the aviation sector.

>>Read: Commission to review competition from Gulf-based airlines

To help support those laid off by Italy’s national carrier, Rome requested help from the European Globalisation Adjustment Fund, an instrument that the European Union uses to aid people who have lost their job as a result of globalisation-based redundancies.

The fund provides different options to help those who qualify for it, including money to help set up businesses, help in job seeking, professional careers advice, and various types of training and education.

Following lawmakers’ approval, the request will now have to be approved by the Council.

The European Parliament also approved requests from Ford and Opel for similar withdrawals from the fund, which will total €14.6 million.

Between 2013 and 2014, Italy, along with 13 other member states, benefitted from the EGF, with 27,000 people receiving support.

Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Poland, Romania and Spain all benefitted from European Globalisation Adjustment Fund assistance in 2013 and 2014.

During this period, the EGF supplied €114.4 million, of which €94.1 million was provided by the member states. As a result, 7,656 people were able to find new employment or start a new business themselves.

Background

Gulf carriers compete with Europe’s airlines on international flights but the subsidies they receive create distortions in the market, denting the competitiveness of EU and US carriers, critics say.

Qatar, Saudi Arabia, and United Arab Emirates airlines have received €39 billion in state aid from their governments since 2004, according to a study compiled for the big three US airlines: American, Delta, and United.

France and Germany complained about the situation at a meeting of EU transport ministers in Brussels on 13 March, saying “European airlines are losing market share against the Gulf companies, because of their unfair competitive practices, and in particular because of the significant public subsidies and guarantees they enjoy.”

Paris and Berlin called on the European Commission to end such practices by adopting a common strategy on controlling foreign airlines’ operations with traffic rights in the EU.

The EU's Transport Commissioner Violeta Bulc said she will seek a new mandate from EU countries to reopen talks with Persian Gulf states about market-distorting state aid to airlines.

She said the Commission will look not into state aid in Persian Gulf states, but also in countries like China, Brazil, and Turkey.

>> Read: Commission to review competition from Gulf-based airlines

Timeline

  • 2 Dec. 2015: Commission to present "aviation package" for improving the competitiveness of the EU Aviation sector

Further Reading