The European Commission is expected to give its green light on Wednesday to a plan by Italian investors to create a new Italian carrier using the flight operations of the failed airline Alitalia.
The European Union executive reviewed a dossier on Alitalia on Monday which suggested authorising Compagnia Aerea Italiana (CAI) to set up a new airline on the condition that it is ''discontinuous'' with Alitalia.
In August, the Italian government changed Italy's bankruptcy laws to allow Alitalia's more profitable flight operations to be spun off into a separate company and sold while the carrier's remaining assets, referred to as a 'bad company', would be declared bankrupt and liquidated to pay for the airline's debts of over one billion euros.
CAI was then set up to buy the flight operations and it is set to present its formal offer before the end of the month.
One of the conditions set by CAI to present its bid was approval from the EU, especially in regard to Alitalia's debts.
First among these was a 300-million-euro bridge loan which the Italian government guaranteed earlier this year to keep the carrier in the air while it was being sold.
According to sources close to the EC, Wednesday will see the loan declared in violation of EU laws on state subsidies and will it have to be paid back by the 'bad company'.
The EC will also demand that Alitalia's assets be sold at market prices and a ''monitoring trustee'' will be appointed to ensure that the sale and liquidation of the 'bad company' respects EU laws.
A similar method was used by the EC for Greece's Olympic Airlines.
