Air France Slated to Receive 7 Billion Euro Bailout Package

The European Union on Monday approved a French state aid of €7 Billion consisting of state loans and state-guaranteed bank loans to aid Air-France in its urgent liquidity in the face of the coronavirus pandemic.

The European competition watchdog exercised its commission under Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU).

“The aviation industry is important in terms of jobs and connectivity. In the context of coronavirus outbreak, Air France has also been playing an essential role in the repatriation of citizens and for the transport of medical equipment. This €7 billion French guarantee and shareholder loan will provide Air France with the liquidity that it urgently needs to withstand the impact of the coronavirus outbreak. We have cooperated closely with France, as with many other member states to ensure that public support to tackle the current crisis can be put in place as quickly and effectively as possible, in line with European union rules,” added Executive Vice President Margrethe Vestager in a Tweet.

But the bailout package also seems to have been accompanied by ‘some strings attached,’ with the French government already having mapped out the conditions for the package. The French Minister for Finance Bruno Le Maire stated, “The aim of Air France must be to become the airline that guarantees the most sustainable protection of the planet.”

Relative of being a ‘good customer’ for Airbus, Air France will have to cut its domestic network to reduce carbon emission while its long-haul and medium-haul fleet to be renewed with aircraft emitting less CO2. Air France will also have to be more profitable.

The Dutch government is also expected to lend €2 billion to €4 billion in urgent liquidity for its carrier KLM through loans and loan guarantees with ongoing speculations on splitting of Air France-KLM, a merger formed in 2004. The French and the Dutch government each hold a 14 percent share of the Air France-KLM Group.