Rome - The European Commission said Monday it is investigating an Italian state loan offering life support to struggling airline Alitalia for possible breach of EU competition rules. Alitalia went into government-controlled extraordinary administration last year, and received a public loan of 900 million euros (1.1 billion dollars) to remain in business.

The state loan may constitute State aid

"The Commission's current view is that the state loan may constitute State aid" not in line with European Union rules, the EU executive said in a statement. The loan, running from May 2017 to at least December 2018, may exceed "the maximum duration of 6 months allowed," and "the Commission has doubts as to whether the aid is limited to the minimum necessary." Alitalia's government-appointed administrators say they have cut the company's losses, and two weeks ago, Italian Industry Minister Carlo Calenda said the airline had barely used the state loan.

The Italian government is looking for buyers for Alitalia

As part of efforts to ensure the company's future, the Italian government is looking for buyers for Alitalia, and received three bids earlier this month. Germany's Lufthansa and Britain's Easyjet have confirmed their interest, while Italian media say the third bidder is Hungary-based Wizz Air. Calenda has described Lufthansa's as the best offer, but he also said the final decision on Alitalia's sale should be made by the next Italian government. The country is in political limbo as a conservative bloc and the anti-establishment Five Star Movement are bickering over a coalition government deal after inconclusive March 4 general elections.