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European Commission authorises €7bn special aid to Air France




The state aid is conditional on Air France giving up certain domestic routes (photo: F.Dubessy)
The state aid is conditional on Air France giving up certain domestic routes (photo: F.Dubessy)
FRANCE. On Monday 4 May 2020, the European Commission authorised the €7 billion emergency liquidity support granted by the French government to Air France. Intended to alleviate the economic consequences of the coronavirus crisis, this aid consists of a €4bn state guarantee (at 90% for a maximum of six years) for loans and a €3bn subordinated shareholder loan granted to the company by the French state.

According to a press release, the European Commission "considers that in the absence of public support, Air France would probably be exposed to the risk of bankruptcy as a result of the erosion of its activities. This would probably cause serious damage to the French economy". The text also states that "France has also demonstrated that all other possibilities to obtain liquidity on the markets have already been explored and exhausted".

 

For Margrethe Vestager, European Commissioner for Competition Policy, "the aviation sector is an important provider of jobs and connectivity. In the context of the coronavirus pandemic, Air France has also played a leading role in repatriating citizens and transporting medical equipment. This guarantee and shareholder loan granted by France (...) will provide Air France with the liquidity it urgently needs to withstand the impact of the pandemic.  It welcomes "the ecological choices" announced by Paris.

The French government has set a condition for this aid: that domestic routes be abandoned when the same journey can be made in less than 2.5 hours by train. This is a "definitive measure" as Bruno Le Maire stated on France Inter on Monday 4 May 2020. The French Minister of the Economy sees the coronavirus crisis as an opportunity to "reinvent our economic development model and make it more environmentally friendly (...) taking the plane to save an hour, which you also risk losing in transport to the airport, is not worth the effort. The cost in carbon emissions is too high."



Monday, May 4th 2020



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