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Monday airline update: Air France-KLM receives €7bn

written by Dylan Nicholson | April 27, 2020

A Boeing 777 300ER in Air France livery, at Roland Garros Airport (Australian Aviation archive)

Talks between Air France-KLM, banking institutions and the French government have ended with the airline announcing that it is set to receive €7 billion.

This support mechanism is comprised of:

  • A French state-backed loan of €4 billion granted by a syndicate of six banks to Air France-KLM and Air France. The French state is guaranteeing this loan up to 90 per cent, and it has a maturity of 12 months, with two consecutive one-year extension options exercisable by Air France-KLM;
  • A direct shareholder’s loan of €3 billion from the French state to Air France-KLM with a maturity of four years, with two consecutive one-year extension options exercisable by Air France-KLM.

This aid mechanism, which remains subject to approval by the European Commission, will enable the Air France-KLM Group to provide Air France with the means necessary to meet its obligations by continuing its transformation in order to adapt in a sector that the global crisis will severely disrupt.

The Dutch state has also stated its intention to support the KLM Group. Discussions to finalise the aspects and conditions of additional aid are ongoing.

The transformation plan, which will be finalised in the coming months, will include economic, financial and environmental commitments.

It will notably involve a review of Air France’s activities, looking to adapt them to the new market reality brought about by the crisis, and will have to strengthen its financial situation.

This transformation will also contain an ambitious environmental roadmap to accelerate the group’s sustainable transition.


“On behalf of our group and its employees, I would like to thank the French state and our banking partners for their support in ensuring the future of the Air France-KLM Group,” said Benjamin Smith, CEO of the Air France-KLM Group.

“This aid, along with the group’s action plan, will enable us to withstand this crisis and foresee the future of Air France-KLM with ambition and determination.

“We are a strong group and we are united in face of this crisis. I would like to once again salute the exceptional commitment of our employees for their dedication to the repatriation of our fellow citizens, the transport of medical equipment, and maintaining the essential links with territories.”

In other airline news:

  • Lufthansa has released its preliminary Q1 reports, citing that in the first quarter, group revenues fell by 18 per cent to €6.4 billion. The previous year’s first quarter saw revenue of €7.8 billion. In March alone, revenues declined by almost €1.4 billion, or 47 per cent.
  • Norway’s parliament voted on legislation that replaces current regulation on debt negotiations. This law relaxes rules for converting debt into equity, which could help save struggling Norwegian Air Shuttle.
  • On 24 April, US carrier Delta Air Lines released a list of international services that will begin in May. While international capacity will be down almost 90 per cent, select routes will see scheduled flights operate again, allowing for the movement of people and cargo.
  • To promote tourism in the Tibet Autonomous Region, Tibet Airlines has just announced that it plans to add 18 new routes to its summer schedule.
  • Croatia Airlines will resume domestic flights on Monday, 11 May, the Croatian Minister for Sea, Transport and Infrastructure revealed to state broadcaster HRT on Friday.
  • On 24 April, Ryanair boss Michael O’Leary warned that he could consider disputing EU airline bailouts in court. The comment comes after O’Leary said governments have been selective about dishing out state aid. He suggested that some of those airlines receiving assistance did not need it and that flag carriers were getting preferential treatment.
  • The government of South Africa and its business rescue team have told trade unions that they now have until 1 May to finalise terms of South African Airways’ (SAA) employee severance deals. The state-owned airline offered severance packages to 4,700 SAA employees.
  • Florida-based ultra-low-cost carrier Spirit Airlines has decided to start flying triangular routes to comply with provisions in the CARES Act. With many aircraft flying with low passenger numbers due to the coronavirus crisis, Spirit has decided to deploy many of its smaller aircraft on triangular multi-city routes.
  •  Virgin Australia‘s administrator has stated it owes over $6 billion as one of its aircraft is impounded via a bulldozer at Perth Airport over unpaid debts.


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