The State flies to the aid of Air France once again
Air France has just announced a strengthening of its capital by the French State.
Thomas Samson AFP / Archivos
Text by: Patricia Lecompte
5 mins
A rescue plan of 4 billion euros for Air France.
The airline has just announced a strengthening of its capital by the French state.
In return, Air France will have to give up 18 slots at Paris-Orly airport.
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The European Commission has just approved this Tuesday, April 6, the State's proposal to grant aid of 4 billion euros to Air France, very affected by the pandemic, the company has seen its activity collapse.
Concretely, the French state will convert its loan of 3 billion euros granted last year into equity, so it is transforming it into an equity investment.
In a press release, the committee specifies that the State will also inject an additional 1 billion euros in the form of a capital increase which will be "
open to existing shareholders and to the market.
», An operation in which the French State and China Eastern will participate, but not the Dutch State or Delta Air Lines.
This recapitalization makes the French State the largest shareholder of Air France.
Its stake goes from 14.3% to almost 30%.
The State will take care not to exceed this threshold beyond which it would be forced to launch a takeover bid on the remaining capital, as required by stock market law.
In return, the Commission demands the cession of 18 flight slots at Paris Orly airport.
With a net loss of just over 7 billion euros, which almost doubled last year to 11 billion euros due to the pandemic, Air France has lost nearly two-thirds of its passengers ... And the year promises to be still difficult, the Air France-KLM group forecasts an operating loss of 1.3 billion euros for the first quarter of 2021. To validate this financial package, Brussels, which ensures that competition rules, set conditions.
The recapitalization plan provides for the French State to receive remuneration for its investment, just as it stipulates that Air France and its holding company buy back the State's stake so that the latter gradually reduces its participation in the capital.
Indeed, the rules of the European Commission require that the States return in the next six years to their level of participation before the crisis.
Moreover, as long as Air France has not fully reimbursed the amount of the recapitalization, it will be prohibited from paying dividends.
In addition, the Commission indicates that its Dutch partner KLM will not benefit from aid from the French state.
Initially, the Commission asked Air France to abandon 24 daily flight slots at Paris Orly airport, south of the capital, ie 7% of its 125,000 slots currently held at this airport.
This is precisely what the German company Lufthansa had done at the airports of Frankfurt and Munich.
But this request was rejected by the company, on the grounds that in the long term, it would weaken it more than it would help it.
Air France had proposed to give up 12 daily take-off and landing slots at Orly, finally it will give up 18, or 9 return flights per day.
This measure could weigh up to 36 million euros on its operating income.
As for the slots released, they will be allocated only to companies based in Orly, such as EasyJet, Vueling or Air Caraïbes.
The Minister of the Economy, Bruno Le Maire specified that Brussels would not grant them to companies which practice social and fiscal dumping, for example Ryanair.
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To read also: To receive European aid, Air France must give up slots at Orly
"Greater stability to move forward, when the recovery begins"
This plan is the result of an agreement between the European Commission and the French government.
The board of directors of Air France-KLM, which has given its agreement to the conditions of this new public aid, believes through the voice of its managing director, Benjamin Smith, that these 4 billion will bring him "
greater stability to move forward, when the recovery begins
”.
For his part, the Minister of the Economy Bruno Le Maire reminds the company to have already “
supported it a lot
” and that it is ready to provide new support, but urges Air France “
to return to profit
.
"
On the other hand, some unions say they are more reserved.
They fear that the abandonment of these 18 flight slots will benefit low-cost companies competing with Air France.
These could capture some of its customers, which would hinder its restart and would have consequences on its payroll.
The Air France CGT union disputes the plan validated by Brussels, it affirms that it is not a new financial support, since the State transforms its initial loan into capital.
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Also to listen: What future for the aviation and aeronautics sector?
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