Air France-KLM secures €7 billion state loan

Air France plans to retire the Airbus A380 by 2022. However, this could be accelerated due to the current crisis. Photo: © Eric Salard

The Air France-KLM Group has secured state-backed loans from France, amounting €7 billion (US $7.6 billion), amid the ongoing Coronavirus crisis.

Following a global spread of the virus disease, most countries have implemented travel restrictions that have led to a virtual standstill of the airline industry.

To battle the losses projected to reach well into the hundreds of billions, many governments have promised to step in and guarantee state-aid to the companies most affected by the crisis. This includes the French government, which has agreed to support Air France-KLM with a total of €7 billion.

This includes a French state-backed loan of €4 billion, provided by a group of six banks to Air France-KLM and Air France itself. Furthermore, the Frech state, which holds a 14.3 percent stake in the European airline group is granting a shareholder loan of €3 billion, with a maturity of four years.

The aid is subject to approval by the European Commission.

On Friday, Air France-KLM stated that the Dutch government intends to support the group as well, but discussions “to finalise the aspects and conditions of an additional aid” are still ongoing.

Air France-KLM is the parent company of Air France and KLM and their respective subsidiaries, including Air France Hop, KLM Cityhopper, Transavia and Martinair. The company also holds a number of minority investments, which included Alitalia and Air Mauritius – two airlines that have entered administration and are expected to be nationalised amid the ongoing crisis.

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