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Italy works on extending Alitalia loan deadline: source

ROME (Reuters) – Italy is working on an extension of as much as six months to a Dec. 15 deadline for Alitalia to repay a 900 million euro ($1 billion) loan meant to keep the airline afloat while it searches for a buyer, a government source said on Saturday.

Once a symbol of Italy’s post-war economic boom, but recently in trouble due to competition from low-cost carriers and high speed trains, Alitalia was put under special administration last year after workers rejected a rescue plan.

As part of the process, Rome has been looking for a buyer, but it has been delayed because of a change of government.

Any extension to the bridge loan deadline may irk the European Commission, which has already been looking into whether it constituted state aid. It may also violate EU guidelines, which allow rescue loans only as a short-term emergency measure.

Alitalia declined to comment.

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