The European Commission has announced that a €1.4 billion ($1.5 billion) support measure proposed by the French government for Air France was in accordance with the EU’s state aid rules. State aid aims to compensate the French flag carrier for the financial damages resulting from the COVID-19 pandemic.
The financial support “will be granted in several tranches and may take the forms of grants, equity support, or liquidity support,” according to the Commission.
Damage caused by the COVID-19
In the wake of the COVID-19 pandemic, airlines throughout Europe have looked to governments for financial help. The latest state aid to Air France is not the first in recent years.
The €7 billion ($7.5 billion) financial aid, which the EU approved on May 4th, 2020, was dedicated to liquidity support for Air France. Another €4 billion ($4.2 billion) financial measure designated to recapitalize the carrier was cleared by the Commission on April 6th, 2021.
The EU Commission’s official statement outlined:
“The Commission found in particular that the French measure will make good the damage that is directly linked to the coronavirus outbreak. It also found the measure to be proportionate, as the compensation does not exceed what is necessary to make good the damage.”
Air France, owned by the Air France-KLM group, is a key player in the French economy regarding employment and connectivity for many domestic and international destinations. Air France currently has a total of 261 aircraft in its fleet, according to ch-aviation.com data.
Air France-KLM financial situation
At the height of the COVID-19 pandemic, Air France-KLM group lost €7.1 billion ($7.6 billion) in net income due to the setbacks of the pandemic. In 2021, the Franco-Dutch airline group incurred a net loss of €3.2 billion ($3.4 billion).
Air France-KLM recently shared their financial results for 2022, which showed that they are doing way better financially than they were the previous year.
Air France-KLM reported a net income of €700 million. The positive result was attributed to an increase in capacity, load factor, and passenger yield. In 2022, Air France-KLM carried a total of 83.3 million passengers.
Commenting on the results, Benjamin Smith, Group CEO, said:
“On the financial side, we successfully undertook major operations to both restore our equity and consolidate our balance sheet while continuing to pay back the State aids we received. We secured landmark deals, including a strategic commercial partnership with CMA CGM Group, which became our largest private shareholder.”
Source: ch-aviation.com
