The Madrid-based International Airlines Group (IAG), a holding corporation controlling five airlines (British Airways, Iberia, Aer Lingus, Vueling, and LEVEL),…
French Government Approves 15 billion Euro Rescue Package
The French state continues to distribute aid to economic sectors impacted by the COVID-19 pandemic. After implementing a plan of 18 billion euros to save the tourism industry and another 8 billion euros for the automotive industry, it was the turn for aviation. The Minister of Economy and Finance, Bruno Le Maire, announced recently a plan of massive support for the aeronautical industry for more than 15 billion euros.
The French aeronautical industry forms an ecosystem of nearly 300,000 jobs and generates an annual turnover of 58 billion euros. The first objective of this support plan is “to respond to the emergency by supporting struggling companies and protecting their employees,” Le Maire said. In particular, in “protecting highly skilled labor” in a sector that employs more than 35,000 engineers. According to the Ministry of Economy and Finance, “100,000 jobs will be threatened in the coming months” if nothing is done. The government decided “to activate export guarantees (…) to avoid cancellations and deferrals of aircraft orders,” said the Minister of Economy.
In addition to employment, the government also wants to take advantage of the crisis to improve the entire aeronautical ecosystem.
“We will invest together with large manufacturers to strengthen SMEs, to grow them, modernize production chains and make them more competitive,” explained Le Maire.
This time, the government will not be the only one to put its hand in its pocket. Two devices will be activated. The first will be endowed with at least 500 million euros. The State will pay 200 million euros, while the big four of the local industry (Airbus, Safran, Thales and Dassault) will inject 200 million euros and an investment fund will add at least another 100 million euros.
The aim is that by the end of 2020, this fund will have around 1 billion euros to “support strategic small and medium-sized companies.” In particular, those that before the crisis had invested massively to keep up with the production rates dictated by Airbus and Safran.
With this package, the government also wants to “protect companies from foreign predators.” The State will also contribute 300 million euros over three years “to support suppliers and subcontractors in the sector in their transformations and process reengineering,” said the Minister of Economy and Finance.
But the State aid does not come without compromise. About 1.5 billion euros will be allocated to support research and development through the Civil Aeronautical Research Council. Originally endowed with 135 million, this fund will see its investment capacity increased to 1.5 billion by 2022.
“The French and European aviation industry plays a central role in the decarbonization of global air traffic, “said Le Maire, seeking to maintain the commitment to reduce carbon dioxide emissions by 50 percent by 2050.
The goal is “to achieve a carbon-neutral aircraft by 2035 instead of 2050, in particular thanks to engines with a very high dilution rate and the use of hydrogen.” In addition to Airbus (and any other supplier seeking to join), which will have to design, develop and produce this aircraft, Air France will also have to commit to “the green transition.” The state requires the airline to renew its fleet by purchasing new aircraft, obviously Airbus.
Finally, the support plan includes a defense component, which will be dealt with separately. The state will anticipate purchases of military equipment for 600 million euros, mostly Airbus helicopters.
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