French Government and European Commission agree on more state aid for Air France

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The French government said on Easter Sunday it has reached a deal with the European Commission allowing it to inject more fresh money into Air France, whose finances are heavily impacted by the coronavirus restrictions.

The agreement follows weeks of negotiations with the EU’s executive, which must ensure that state aid does not give companies an unfair advantage.”We have an outline agreement with European Commissioner Margrethe Vestager about new financial aid for Air France,” Finance Minister Bruno Le Maire said on LCI television channel on Sunday.

Air France will have to give up slots at Paris Orly in return for the green light from Brussels, Le Maire said, but less than the 24 that the EU requested.

Air France posted a net loss of 7.1 billion euro in 2020. Le Maire would not tell the amount of money to be given Air France, saying this was part of discussions to be held with the airline. According to Reuters news agency, this involves an amount of 3 billion euros.

In April last year, Air France received a package of loans and state-guaranteed bank loans worth 7 billion euros.

Le Maire said the agreement with the Commission was “very good news for Air France and for the whole French aviation sector“, adding that negotiations had been “tough“.

For KLM there is not yet any prospect of a comparable agreement on support for KLM.

According to EU rules, any government granting more than 250 million euros in aid to a company with “significant market power” had to propose additional measures to safeguard competition.

Any fresh capital for Air France will be scrutinised not only by the EU, but also by the carrier’s competitors which want to make sure that the playing field remains level.

 

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