EU approves $4.7 bn in state aid to Air France

Brussels: The European Union has approved $4.7 billion in state aid for national carrier Air France as it struggles through the economic impact of the COVID-19 pandemic, a decision the French government welcomed as good news.

In return for the aid, the carrier has promised to make slots available to competitors at the busy Orly airport in Paris.

The public support will come with strings attached, said EU Commission Vice President Margrethe Vestager.

Last year, Air France got 3 billion euros in direct loans from the French state, which will be converted into bonds as part of a recapitalization of up to 4 billion euros ($4.7 billion).

In exchange, the government set conditions of profitability and more environmentally sustainable, less polluting policies.

In addition, the French state will participate in the capital increase of the holding company for the Air France-KLM airline alliance, to hold up to 29.9 per cent of capital of the group, the French and Dutch governments said in a joint statement. The French state now holds 14.3 per cent of the shares.

France and The Netherlands reaffirmed they are not considering nationalizing the group.

This is good news for Air France and good news for the French, Le Maire said on France Inter radio on Tuesday. Air France will give up 18 takeoff and landing slots about 4 per cent of its slots at Paris-Orly airport, he detailed.

The French government, the airline's largest single shareholder, has said it was essential to save the national carrier. Air France-KLM expects an operating loss of about 1.3 billion euros ($1.5 billion) for the first quarter of 2021.

These first recapitalization measures are an important milestone for our group in this exceptionally challenging period, said Air France-KLM CEO Benjamin Smith in a statement.

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