Air France can (a little) breathe. The European Commission authorized France on Monday to grant 7 billion euros in support to the airline to face the consequences of the coronavirus crisis. "This guarantee and this shareholder loan granted by France, in the amount of 7 billion euros, will provide Air France with the liquidity it urgently needs to resist the repercussions of the pandemic," explained the commissioner. European Competition Authority, Margrethe Vestager, cited in a press release.
The EU executive, guardian of competition in the EU, softened its state aid rules in mid-March to allow them to support businesses in need.
"Serious damage to the French economy"
For Air France, French loans will be broken down into 4 billion bank loans guaranteed 90% by the State and 3 billion direct loans from the State, with in return commitments to improve its profitability and reduce of its CO2 emissions.
State support for #AirFrance is accompanied by specific # ecological commitments
✅ -50% CO2 emissions by 2024 for domestic flights
✅ renewed fleet: -25% CO2
✅ domestic flight plan redefined , in particular if rail alternative of less than 2h30 pic.twitter.com/zs3FkWgAEX
"France has also shown that all other possibilities of obtaining liquidity on the markets had already been explored and exhausted", explains the Commission, which considers that "in the absence of public support, Air France would be without doubt exposed to the risk of bankruptcy following the erosion of its activities ”. "It would probably result in serious damage to the French economy," she said.
Air France has suffered a drastic reduction in activity following travel restrictions imposed worldwide to limit the transmission of the coronavirus, which results in significant operating losses.
France and the Netherlands each own 14% of the Franco-Dutch group that the airline forms with KLM. The Dutch government plans to help KLM with between two and four billion euros in the form of loans and guarantees.