European Commission approves €7 billion state aid for Air France

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Copyright Kevin Goolaerts

Air France will receive a government loan of around €7 billion that would enable the French airline to maintain its solvency. The European Commission has approved, under EU State aid rules, the French aid measure consisting of a State guarantee on loans and a shareholder loan to Air France to provide urgent liquidity to the company in the context of the coronavirus outbreak.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The aviation industry is important in terms of jobs and connectivity. In the context of the coronavirus outbreak, Air France has also been playing an essential role in the repatriation of citizens and for the transport of medical equipment.

This €7 billion French guarantee and shareholder loan will provide Air France with the liquidity that it urgently needs to withstand the impact of the coronavirus outbreak. We have cooperated closely with France, as with many other Member States, to ensure that public support to tackle the current crisis can be put in place as quickly and effectively as possible, in line with EU rules.

France has also announced plans for certain green policy choices as regards Air France. Good. Member States are free to design measures in line with their policy objectives and EU rules.”

The support mechanism is comprised of:

  • A French state-backed loan of €4 billion granted by a syndicate of six banks to Air France-KLM and Air France. The French state is guaranteeing this loan up to 90%, and it has a maturity of 12 months, with two consecutive one-year extension options exercisable by Air France-KLM;
  • A direct shareholder’s loan of €3 billion from the French state to Air France-KLM with a maturity of four years, with two consecutive one-year extension options exercisable by Air France-KLM.

Air France secures funding of €7 billion and KLM €2 to 4 billion to help overcome the crisis and prepare for the future

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