A direct government grant of almost €200 million ($236 million) to Alitalia has been approved by the European Commission to compensate the airline for damage caused by the Covid-19 pandemic.

Competition regulators approved the €199.5 million direct grant, which relates to the impact on Alitalia’s business of coronavirus containment measures and travel restrictions between 1 March and 15 June, under the Treaty on the Functioning of the European Union.

The treaty allows for state aid to be granted to compensate specific companies or sectors for damage caused by exceptional occurrences.

“Since the start of the coronavirus outbreak, Alitalia has suffered a significant reduction of its services, resulting in high operating losses,” says the Commission in a 4 September statement.

Regulators concluded that the Alitalia grant is in line with EU state-aid rules because it is “proportionate” and “does not exceed what is necessary to make good the damage”.

Italy’s government indicated in March that it would renationalise the struggling flag carrier as part of a broad set of emergency measures in response to the coronavirus crisis.