France agrees with EC over Air France-KLM aid package

Photo: AP

France announced on Sunday it had reached an agreement with the European Commission related to the framework of refinancing operation targeted at strengthening Air France-KLM’s balance sheet, Reuters reported quoting Finance Minister Bruno Le Maire.

Le Maire declined to comment on the amount of funds envisaged. He confirmed that the airline group’s board was due to meet on Monday to discuss and approve the package, as successive coronavirus shutdowns take their toll.

Air France-KLM, which last year received 10.4 billion euros in government-backed loans, has been discussing a multi-stage recapitalisation plan to lighten the resulting debt load, sources have said. This will likely involve converting a 3 billion euro French government loan into hybrid instruments.

But the plan had been held up by wrangling over EU demands that Air France should give up Paris-Orly take-off and landing slots as a condition. Le Maire said the airline had given up some slots in negotiations, but not the 24 initially demanded by Brussels, which would have put Air France on a par with those ceded by Germany’s Lufthansa in Frankfurt and Munich as part of its state-backed capital hike. France and the Netherlands each own close to 14% of Air France-KLM, and the Dutch state has held separate EU talks over converting its 1 billion euro loan to KLM into hybrid debt in return for slot concessions at Amsterdam-Schiphol.

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