EU approves €4 billion French state aid for Air France

Photo: © Phillip Rohmberger / IFN

The European Commission has approved up to 4 billion Euros (US $4.7 billion) of French government issued financial aid for Air France-KLM.

This amount will only benefit the French part of the Air France-KLM Group. The group says it is in discussions with the Dutch government regarding possible state aid to Amsterdam-based KLM Royal Dutch Airlines. France and the Netherlands each hold about 14 percent of Air France-KLM.

The French government is also converting a loan of €3 billion it provided to Air France in 2020 into a hybrid perpetual bond according to Finance Minister Bruno Le Maire. With the newly approved state support for the airline group, France could see its stake in Air France-KLM increase to almost 30 percent, making the country the largest shareholder of the multi-national company.

Like most other passenger airlines around the world, Air France-KLM is experiencing significant losses due to the Coronavirus pandemic. The group reported net losses of more than 7 billion Euros for the year 2020. It currently expects cash flow to stay negative throughout 2021 and 2022, but anticipates a possible return to positive operating results in 2023.