Concordato Preventivo (Composition with Creditors) in Italian Law and Their Repercussions on Aviation Claims

2 New Rules on Concordato Preventivo (Composition with Creditors) in Italian Law and their Repercussions on Aviation Claims

Anna Masutti*

With the economic crisis hitting Italian industry hard, the Monti government has introduced measures designed to enable Italian business to achieve rapid economic and fĳinancial recovery. These instruments were introduced into Italian law with the ‘Decreto Sviluppo’ (Development Decree – Decree-Law 22 June 2012, n. 83, passed into Law n.134 of August 7, 2012). This wide-ranging law includes provisions that reform composition with creditors (in particular, the concordato preventivo). This article focuses on the implications of the new measures, in particular on third party claims against air transport operators. The analysis extends to matters concerning the jurisdiction and applicable law in relation to lawsuits directly cor- related to the new composition with creditor procedures, such as disputes arising from claw back actions or contract cancellation, if there are elements of trans- nationality.

1. The current crisis in the Italian air transport sector Like other major European countries, the global economic crisis has severely afffected Italian industry. In October 2011, ISTAT (the Italian Statistical Institute) recorded the worst-ever drop in Italian domestic demand, which continues to plague the manufac- turing sector. In the fĳirst 11 months of 2012, the cumulative drop was 9.3% compared to the same period two years ago. Inevitably, the crisis would afffect an important sector of the national economy, such as air transportation, which, being transnational in character, sufffered from the economic crisis that has had an impact on all European countries, and in particular, because of the negative efffects of the fuel price increases occurring at an international level. These short-term factors have put at a disadvantage companies that had already showed signs of fĳinancial weakness and economic vulnerability. In this context, it is

* Partner of LS Lexjus Sinacta Italy. Professor of Air Law, University of Bologna.

Pablo Mendes de Leon (ed.), From Lowlands to High Skies – A Multilevel Jurisdictional Approach towards Air Law. Copyright 2013 Koninklijke Brill NV. Printed in The Netherlands. ISBN 978-90-04-26063-4. pp. 21-41. 22 Part A: Public Air Law | Chapter 2 – Anna Masutti

not just Alitalia (C.A.I.) that sufffered the negative efffects of the international crisis; also minor players in the national airline sector such as Blue Panorama, Wind Jet and Meridiana Fly were afffected. Over the last decade, Alitalia has had to cope with in- creasingly aggressive competition from low-cost carriers such as Ryanair and EasyJet,1 which have gained signifĳicant market shares, exceeding that of Alitalia itself. According to data provided by the Irish airline itself, Ryanair now appears to be the most important carrier in Italy in terms of passengers carried. In 2012, Ryanair carried 22.9 million passengers compared to Alitalia’s 22.3, although in all fairness, another 2 million passengers carried by the Alitalia subsidiary Air One should be add- ed to the latter’s numbers. However, according to the trafffĳic data recently published by ENAC, the Italian Civil Aviation Authority, based on the number of passengers carried in 2012, the top three positions are occupied by the new Alitalia, i.e. Alitalia C.A.I., followed by the above-mentioned foreign low-cost carriers.2 As the competition generated by the low-cost carriers grew more and more aggressive over time, and the recurrent losses of the airline frustrated the attempts of recapitalization by the Italian Government,3 it had become inevitable in 2008, to ini- tiate more adequate insolvency proceedings to preserve the continuity of Alitalia’s transport services. Unlike other European airlines, which had undergone industrial reorganization procedures rather successfully following the 2002 airline industry crisis that came in the aftermath of September 11 (Air France– KLM, British Airways, Lufthansa and SAS Scandinavian Airlines), Alitalia had never been able to recover from its losses. Given the gravity of the situation, and in view of the urgency to arrive at a satis- factory solution for Italy’s national carrier, in 2008, the Italian government adopted measures to revive the sagging fortunes of its former flagship carrier. Decree-Law 134/2008, passed into Law 166/2008, has had a signifĳicant impact on the process of restructuring large fĳirms in crisis situations. Although the initiative was intended primarily at preserving the core part of Alitalia, it would also be of use to public utili- ties that found themselves in similar crises. This regulatory action helped in the iden- tifĳication of Alitalia’s assets and its various relationships, and made it possible for Alitalia to manage its aviation activities and present itself as an attractive acquisition

1 A historic decision by the Italian Antitrust Authority (the decision of 25 October, 2012) has consolidated EasyJet’s position in the Italian market. This was later confĳirmed by the Lazio Regional Administrative Court (TAR of Lazio, Section I, judgment no. 8614/2012 of October 18, 2012) and in the second instance by the Council of State (Consiglio di Stato), Section VI, judgment 403/2013 of 23 January 2013. The judgment marked the end of Ali- talia’s monopoly on the Rome Fiumicino - Milan Linate route, by assigning seven slots previously held by Alitalia in favor of EasyJet. 2 ENAC, Dati di trafffĳico 2012, on www.enac.gov.it. 3 These state interventions prompted the European Commission to denounce the Italian government for its violation of the rules on state aid. See in particular, Commission Deci- sion EC 6743/2 of 11 November 2008.