Covid-19: France Releases 7 Billion Euros in Aid for Air France and 5 Billion for Renault

Finance
France releases billions of aid to Air France and Renault during Covid-19 crisis

To cope with the disastrous consequences of the coronavirus epidemic on certain French companies, the government has released emergency aid.

The French and Dutch states have promised massive aid to save Air France-KLM from the disastrous consequences of the coronavirus epidemic, with ten billion euros in direct or bank loans.


The French Minister of Economy Bruno Le Maire announced a total envelope of 7 billion euros for the airline, during an interview with the newspaper of 8:00 pm of TF1.


He also mentioned aid of five billion euros for the automobile group Renault.

No nationalization

For Air France, these loans will be broken down into 4 billion bank loans guaranteed 90% by the state and 3 billion direct loan from the state, said Le Maire. “We must save our national company,” he added, describing the plan as “historic”.

However, he stressed that the nationalization of the company was “not on the agenda” when the option had been raised.

2-4 billion euros from the Netherlands

An hour later, Dutch Finance Minister Wopke Hoekstra promised 2-4 billion euros in public aid for KLM at a press conference in The Hague.

The French and Dutch states each own around 14% of the group.


“We are in the process of clarifying the details” of this support, he added.

In total, the Franco-Dutch airline group will be able to count on an envelope of 9 to 11 billion euros to overcome the historic crisis in the aviation sector, put on hold by the multiple travel restrictions imposed by authorities around the world. to curb the Covid-19 epidemic.

“Save 350,000 direct and indirect jobs”

The two ministers published a joint press release shortly afterwards to ensure “sharing the same priority for Air France-KLM”, namely to make tender “all efforts to respond to this unprecedented shock”.

While almost all of its planes are grounded, Air France-KLM faces a critical situation. The measures announced Friday are taken “to save the 350,000 direct and indirect jobs that go with them,” said Le Maire.

This support “is not a blank check”, he however underlined. “We have set conditions for Air France. Conditions of profitability, because it is the money of the French therefore Air France must make an effort to be more profitable, and ecological conditions. Air France must become the most environmentally friendly airline on the planet. This is the condition I am most attached to, “he said.

Breath of fresh air

The airline, of course, welcomed this breath of fresh air. During a videoconference in the French Senate on Wednesday, the director-general of Air France-KLM Ben Smith had deemed this public support “essential”.

Group management then pointed out that Air France currently operates less than 5% of its regular flights, and KLM less than 10%.

Disarray is general in the sector, particularly struck by the consequences of the Covid-19 epidemic. In early April, the collapse of world traffic reached 80% compared to 2019 while the sector was still sailing recently on comfortable forecasts of a doubling of the number of passengers in 20 years with a growth rate of 3 to 4% per year.

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