The EU has approved a plan by the French government to inject up to four billion euros into Air France. The bailout comes after the airline reported it has been hit by a collapse in passenger traffic during the pandemic.
The agreement, worth $4.7 billion, follows weeks of negotiations with the EU commission, which must ensure that state aid does not give companies an unfair advantage.
In return for the green light, the commission, which is the EU’s anti-trust regulator, said Air France would relinquish about 18 slots per day at Orly, Paris’ second-largest airport.
This, EU competition commissioner Margrethe Vestager said “gives competing carriers the chance to expand their activities at this airport; ensuring fair prices and increased choice for European consumers.”
French Finance Minister, Bruno Le Maire also disclosed that the EU has allowed the French state to raise its stake in the national carrier to 30 percent, up from the current 14.9 percent.
“This is good news for Air France and good news for the French.”
Bruno Le Maire
Air France posted a 7.1-billion-euro ($8.4 billion) loss in 2020 as its business, like that of the rest of the world’s airlines, suffered from coronavirus restrictions which all but grounded global air traffic.
The Netherlands’ flag-carrier KLM, which forms an alliance with Air France, will not benefit from the aid.
Ineffective remedies will damage competition
Rival airline, Ryanair, has lambasted French aid for Air France, saying it distorts competition.
The Irish-based low-cost carrier has long railed against support given to “national champions”, and is often backed by the EU.
Reacting to news of Air France’s bailout, Ryanair has released a statement condemning the decision by the European Commission.
“This latest tranche of state aid to Air France; combined with these ineffective remedies will damage competition in the air transport market for decades to come.
“The 18 slots that Air France is being required to make available is nowhere near enough to allow others to offer a competitive challenge to Air France’s dominance at Paris Charles de Gaulle and Paris-Orly airports.”
Ryanair statement
Ryanair earlier announced that it is seeking to challenge Germany’s massive bailout of Lufthansa in the EU courts, as well as schemes in Spain, the Netherlands, Denmark and Portugal.
EasyJet has also expressed concern over the massive bailout forAir France. Speaking in an interview, EasyJet chief executive, Johan Lundgren said he is “concerned about the scale of these bailouts”. also let
“I’m not against aid as such. Because to some extent this (pandemic) has gone way beyond what you can expect the industry to deal with.
“I think it’s the scale and the billions and billions being pumped into some of the legacy airlines out there.
“If that money and funds are not there purely to survive but actually to grow market share and take advantages and for investment that they otherwise couldn’t afford, that’s not fair and that distorts the level playing field. We can be very mindful to make the competition authorities aware of that.”
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