Air France gets more state support to cope with mounting debts.
Air France on Tuesday said it would receive a new bailout from the French government worth 4 billion euros ($4.7 billion) to help the beleaguered airline cope with mounting debts as a third wave of pandemic lockdowns around Europe prolong a slump in continental air travel.
The support comes on top of €10.4 billion ($12.3 billion) in loans and guarantees that Air France and its partner, the Netherlands-based KLM, received from the French and Dutch governments last year.
Air France-KLM chief executive, Benjamin Smith, citing an “exceptionally challenging period,” said the funds would “provide Air France-KLM with greater stability to move forward when recovery starts, as large-scale vaccination progresses around the world and borders reopen.”
Bruno Le Maire, France’s finance minister, said Tuesday that the new aid is taking the form of a state-backed recapitalization, which involves converting €3 billion in loans the government granted the airline last year into bonds with no maturity, as well as €1 billion in fresh capital through the issuance of new shares.
The French government is the airline’s largest shareholder, at 14.3 percent. The agreement could allow the government to raise its stake as high as 30 percent, Mr. Le Maire and Air France said, by buying some of the new shares. China Eastern Airlines, also a large shareholder, will also participate, Air France said.
Air France-KLM lost two-thirds of its customers last year, and its debt has nearly doubled to €11 billion. It expects an operating loss of €1.3 billion in the first quarter.
As vaccinations speed ahead in the United States, air travel has started to recover, fueling a return of ticket sales. Delta Air Lines announced it would add more passengers and start selling middle seats for flights starting May 1, more than a year after it decided to leave them empty to ensure social distancing.
By contrast, Europe’s vaccine rollout has faltered and infections of new variants of the virus have gained ground, prompting renewed travel restrictions in France and neighboring countries. That is slowing a recovery in travel and leaving major flagship air carriers, including Air France-KLM, Lufthansa of Germany, and Alitalia of Italy, struggling.
The French government recently cut its economic growth forecast for 2021 to 5 percent, down from a 6 percent forecast before the new lockdown.
Air France’s board approved the deal on Tuesday after the French government and European regulators struck a deal over the terms of strengthening the carrier’s balance sheet.
The Dutch government is holding separate talks with European regulators over converting a €1 billion loan to KLM into hybrid debt in return for slot concessions at the Schiphol Airport in Amsterdam.
Air France employs tens of thousands of workers in France and is considered too big to fail. Still, Mr. Le Maire said the aid was not a “blank check” to the company, which he said would have to “make efforts on competitiveness” in exchange for the support and must continue to reduce its carbon emissions.
To conform to European competition rules, Air France was forced to relinquish 18 slots per day, representing nine round-trips, to competing airlines at Orly, Paris’ second-largest airport after Charles de Gaulle.
- What Makes a Happy Country?
- A vaccinated airport worker in New Zealand tests positive for Covid-19
- Binghamton Schools Apologize To Police Over Book Read Aloud To Students
- ‘Within minutes I was weeping’: the US pastor using scripture to mobilize climate action
- Iran Rattled as Israel Repeatedly Strikes Key Targets
- 5 Things to Know About Booking a Summer Rental
- Georgia Faith Leaders to Urge Boycott of Home Depot Over Voting Law
- The US is vaccinating Americans at a record pace. But here’s why Covid-19 cases and hospitalizations are up
- UK Covid live: ministers created confusion by muddling lockdown guidance with law, police watchdog says
- Waters brushes off judge’s criticism over ‘confrontational’ comment, claims he said her words ‘don’t matter’
Common Symptoms Of COVID-19
The CDC has a collection of nine Roche antibody assays designed to provide rapid results from COVID-19 rapid antigen test. If you are a potential carrier of the human papilloma virus (HPV) and are looking for HPV testing kits for the home, it is important…
Things You Never Knew About The Best Water Purifier
Things You Never Knew About The Best Water Purifier: We all know the importance of having a water purifier at home, but not many people know the things they need to know before buying one. Most of the time, we miss out on the most…
Med hub smart pill, a device for patients having medicines intake in the daily schedule.
Med hub smart pill: The drug prescribed by a doctor will be effective if it would be taken at the right time suggested by the doctor because it is necessary for our healing process. When a patient takes too many medicians in a day also…
10 Best Effective Plants to Fight Pollution – Diwali Edition
Effective Plants to Fight Pollution: Few more months and the most awaited festival of the year will be here. We Indians love our festivals, and the biggest festival of India, especially north India, is Diwali. It is a massive affair here. It generally falls in…