The European Commission authorized France on Monday to grant 7 billion euros in support to Air France 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," said the commissioner. European Competition Authority, Margrethe Vestager, cited in a press release.
Without "public support", Air France "exposed to bankruptcy risk"
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. For Air France, French loans will be broken down into 4 billion bank loans guaranteed 90% by the State and 3 billion direct loan from the State, with in return commitments to improve its profitability and reduce of its CO2 emissions.
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"France has also demonstrated 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.
2 to 4 billion from the Netherlands
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.
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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.