The State will be able to rise “to a little less than 30%” of the capital of Air France, indicates Bruno Le Maire

The company’s rescue plan by the state has been validated by Brussels. It could reach 4 billion euros.

Massive support for Air France. The European Commission on Tuesday approved a plan by the French state to grant up to 4 billion euros in aid to the airline and recapitalize it. Like the entire airline industry, Air France was brought to the ground by the pandemic and the collapse in passenger traffic.

Concretely, the recapitalization of Air France provides for “the conversion of the € 3 billion state loan already granted by France into a hybrid capital instrument” as well as a “capital injection by the state“Via a capital increase”open to existing shareholders and to the market“, Within the limit of one billion euros, said the European Commission in a press release.

Losses of 1.3 billion euros

Invited to the microphone of France Inter this Tuesday morning, the Minister of the Economy Bruno Le Maire welcomed this validation. He also indicated that the State will now be able to go up “at a little less than 30%»Stake in Air France, compared to 14.3% today.

Bruno Le Maire also recalled the state’s demands on Air France: the first consideration requested is the continuation of the savings plan announced by the boss of the firm, Benjamin Smith. The second is a “50% reduction in emissions per passenger by 2030, recalled Bruno Le Maire. Air France must become the most respectful airline on the planet.Air France will also have to cede 18 flight slots to other airlines.

The government’s stated objective is to strengthen the competitiveness of the French airline. Bruno Le Maire believes that Air France is already competitive “on long haul, but less on other destinations.“The challenge is therefore to keep this company afloat”strategic», While the sector’s recovery horizon remains distant due to a new epidemic outbreak and health restrictions decided in France and around the world.

A plan with limitations

The European executive will ensure that the French support plan obeys a certain framework. The injection of capital by the French State, first of all, “will not exceed the minimum necessary to guarantee the viability of Air France and its holding company and to restore the capital situation which it had before the Covid-19 pandemic“.

In addition, the French State “will receive an appropriate remuneration for the investment, and additional mechanisms have been put in place to encourage Air France and its holding company to buy back the State’s equity investment resulting from the recapitalization“. The French State will have to present a plan to reduce its participation in the capital. “As long as the recapitalization is not reimbursed at 100%, Air France and its holding company are subject to a dividend ban.», Also underlined the Commission. Finally, KLM, the Dutch partner within the Air France-KLM group, will not benefit from the aid.

The support plan remains a breath of fresh air for the airline, which has suffered hard from the economic consequences of the crisis. Air France forecasts an operating loss of 1.3 billion euros in the first quarter of 2021. Its managing director, Benjamin Smith, judges, however, that public aid will bring it “greater stability to move forward when the recovery begins“. The company says it has “solid liquidity and credit lines of € 8.8 billion as of February 28, 2021“, And predicts, optimistically,”a significant upturn in demand” this year.


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