Tuesday, April 06, 2021
Aviation industry on the ground
Air France receives further billions in aid
The corona crisis has hit airlines hard. France must also support the domestic company Air France – for the second time. The EU Commission has approved up to four billion euros in further aid. However, these are tied to conditions.
The EU competition watchdogs have given the green light, subject to conditions, for further state aid to the airline Air France, which has been hard hit by the Corona crisis. France could contribute up to four billion euros to strengthen equity and help the company to cope with the financial difficulties, said EU Commissioner Margrethe Vestager.
It is not the first billion euros in aid for the French-Dutch company Air France-KLM. Last year the government in Paris had already pledged seven billion euros. Money also came from The Hague. According to earlier information, the group benefited from financial aid of over ten billion euros, which come directly from the state or are secured by the state.
France’s economics and finance minister Bruno Le Maire told the radio station “France Inter” that the French state could now increase its stake to around 30 percent. He currently holds a good 14 percent. In return, Air France has to give some of the take-off and landing slots to other companies at Paris Orly Airport. This would allow competitors to expand their activities at the airport, which would ensure fair prices and greater choice for consumers, said Vestager.
Germany is investing billions in Lufthansa
Last year Air France-KLM made a loss of 7.1 billion euros after a profit of 290 million a year earlier. In addition, the company is constantly losing money. Between the end of September and the end of December, liquid funds and credit lines shrank from 12.4 to 9.8 billion euros. “The state is reaffirming its commitment to the side of society and its employees by once again supporting Air France financially and by becoming its largest shareholder,” said Le Maire. This decision guarantees “the continued existence of a strategic enterprise for the French nation”.
The Lufthansa Group was also supported by its home countries Germany, Austria, Switzerland and Belgium last year – with a total of nine billion euros. Despite the long-term disruption of air traffic, Lufthansa has now stabilized financially and obtained cheaper loans on the free capital market.
At the upcoming Annual General Meeting on May 4, the company management wants to be authorized by the shareholders to replace the high-interest silent participations of the federal government in the amount of 5.5 billion euros with a capital increase. The Management Board and the Supervisory Board should be able to use this authorization until 2026. In Lufthansa, too, the state is the largest single shareholder through the German Economic Stabilization Fund with a stake of 20.05 percent.