green light from Brussels to 4 billion euros in state aid

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The European Fee on Tuesday authorised a plan by the French state to grant as much as 4 billion euros in support to Air France, to recapitalize the airline introduced down by the pandemic and the collapse of passenger visitors. In return for this support, “Air France has undertaken to make slots obtainable on the saturated Paris Orly airport, the place (it) has important market energy. These provisions give competing carriers the potential for ‘to broaden their actions at this airport, “mentioned European Competitors Commissioner Margrethe Vestager to justify the inexperienced mild, in a press release.

18 slots for different firms

In whole, 18 slots might be ceded to different firms, introduced the French Minister of the Financial system Bruno Le Maire. Air France at the moment has 300 every day slots, a superb majority of the airport’s schedule, due to which it may well carry out 125,000 flights per yr. A switch of slots inadmissible for the unions: “That is what we’ve got most valuable, we shoot ourselves within the foot,” chokes the CGT part of Air France. “Brussels was asking for twenty-four slots. It was an excessive amount of, it might have weakened Air France and it might have been counterproductive. We negotiated effectively,” mentioned Europe 1, however, to Bruno Le Maire’s cupboard.

The French state might be approved to rise to “rather less than 30%” of the capital of Air France, towards 14.9% at present, as a part of this plan, additionally specified the Minister of the Financial system.

The recapitalization of Air France offers for “the conversion of the State mortgage of three billion euros already granted by France right into a hybrid capital instrument” in addition to a “capital injection by the State” by way of a rise of capital “open to present shareholders and to the market”, inside the restrict of 1 billion euros, defined the European Fee in its press launch.

Limitations

The plan has limitations. The injection of capital by the French State “won’t exceed the minimal crucial to ensure the viability of Air France and its holding firm and to revive the capital state of affairs which it had earlier than the Covid-19 pandemic”, harassed the European government.

As well as, the French State “will obtain acceptable remuneration for the funding, and extra mechanisms have been put in place to encourage Air France and its holding firm to purchase again the State’s fairness funding ensuing from the recapitalization”. The French state must current a plan to cut back its fairness stake. “So long as the recapitalization shouldn’t be reimbursed at 100%, Air France and its holding are topic to a dividend ban,” the Fee additionally underlined. KLM, the Dutch accomplice within the Air France-KLM group, won’t profit from the help, in keeping with the Fee.

Air France-KLM introduced Tuesday forecast an working lack of 1.3 billion euros within the first quarter of 2021. Its managing director Benjamin Smith judged that the general public support will convey him “larger stability to go from the earlier than when the restoration begins “. The corporate says it has “stable liquidity and credit score strains of 8.8 billion euros as of February 28, 2021”, and “nonetheless expects a major restoration in demand” this yr.

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The European Fee on Tuesday authorised a plan by the French state to grant as much as 4 billion euros in support to Air France, to recapitalize the airline introduced down by the pandemic and the collapse of passenger visitors. In return for this support, “Air France has undertaken to make slots obtainable on the saturated Paris Orly airport, the place (it) has important market energy. These provisions give competing carriers the potential for ‘to broaden their actions at this airport, “mentioned European Competitors Commissioner Margrethe Vestager to justify the inexperienced mild, in a press release.

18 slots for different firms

In whole, 18 slots might be ceded to different firms, introduced the French Minister of the Financial system Bruno Le Maire. Air France at the moment has 300 every day slots, a superb majority of the airport’s schedule, due to which it may well carry out 125,000 flights per yr. A switch of slots inadmissible for the unions: “That is what we’ve got most valuable, we shoot ourselves within the foot,” chokes the CGT part of Air France. “Brussels was asking for twenty-four slots. It was an excessive amount of, it might have weakened Air France and it might have been counterproductive. We negotiated effectively,” mentioned Europe 1, however, to Bruno Le Maire’s cupboard.

The French state might be approved to rise to “rather less than 30%” of the capital of Air France, towards 14.9% at present, as a part of this plan, additionally specified the Minister of the Financial system.

The recapitalization of Air France offers for “the conversion of the State mortgage of three billion euros already granted by France right into a hybrid capital instrument” in addition to a “capital injection by the State” by way of a rise of capital “open to present shareholders and to the market”, inside the restrict of 1 billion euros, defined the European Fee in its press launch.

Limitations

The plan has limitations. The injection of capital by the French State “won’t exceed the minimal crucial to ensure the viability of Air France and its holding firm and to revive the capital state of affairs which it had earlier than the Covid-19 pandemic”, harassed the European government.

As well as, the French State “will obtain acceptable remuneration for the funding, and extra mechanisms have been put in place to encourage Air France and its holding firm to purchase again the State’s fairness funding ensuing from the recapitalization”. The French state must current a plan to cut back its fairness stake. “So long as the recapitalization shouldn’t be reimbursed at 100%, Air France and its holding are topic to a dividend ban,” the Fee additionally underlined. KLM, the Dutch accomplice within the Air France-KLM group, won’t profit from the help, in keeping with the Fee.

Air France-KLM introduced Tuesday forecast an working lack of 1.3 billion euros within the first quarter of 2021. Its managing director Benjamin Smith judged that the general public support will convey him “larger stability to go from the earlier than when the restoration begins “. The corporate says it has “stable liquidity and credit score strains of 8.8 billion euros as of February 28, 2021”, and “nonetheless expects a major restoration in demand” this yr.

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