European Commission approves €7bn in state aid for Air France
The European Commission has approved €7bn (£6.2bn) in emergency funding for embattled airline Air France, saying that if it did not it could cause “severe harm to the French economy”.
The aid package will consist of both a state guarantee on loans and a shareholder loan.
Margrethe Vestager, the EU’s top competition official, said: This €7 billion French guarantee and shareholder loan will provide Air France with the liquidity that it urgently needs to withstand the impact of the coronavirus outbreak.
“We have cooperated closely with France, as with many other member states, to ensure that public support to tackle the current crisis can be put in place as quickly and effectively as possible, in line with EU rules”.
Vestager also noted that the airline had played an “essential role” in both repatriation efforts and the transportation of medical supplies.
Under new climate policies designed by the French government, Air France will have to cut some internal domestic routes as part of the deal.
Speaking to Le Parisien, French finance minister Bruno le Maire said that the aid was granted on condition that Air France became the most environmentally friendly airline in Europe:
“Yes, [Air France] will have to remove domestic lines. But when it takes two and a half hours to take the train, taking a plane is not justifiable”, he said.
Vestager said that states were free to design their own measures in line with the EU’s rules.
The new policy represents some good news from struggling domestic rail service SNCF, which the French government also pledged to prop up today.
However, the EU’s decision is likely to be unpopular with some other carriers, who have warned that state aid could radically distort the aviation market when recovery begins.
Last week Ryanair said that it would challenge such state bailouts with the European Union, calling them “unlawful”.