02/03/2024 1:23 AM


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French state may call on banks to contribute to Air France bailout

PARIS (Reuters) – The French government may call on banks to contribute to a bailout of Air France KLM if it offers state support to the struggling airline, the finance minister said on Thursday.

FILE PHOTO: An Air France plane prepares to land at Nice International airport in Nice as Air France KLM will park its biggest airliners and slash service by up to 90{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} over the next few days in response to the impact of the coronavirus disease (COVID-19) outbreak, France, March 16, 2020. REUTERS/Eric Gaillard

The government has earmarked 20 billion euros ($21.7 billion) to recapitalise – or nationalise if necessary – big French firms that cannot make it alone through the coronavirus crisis and has indicated that Air France is first in line.

“You say that Air France (needs) 7 billion euros, we can very well imagine that the effort is shared between the state and the banks,” Finance Minister Bruno Le Maire said on BFM TV.

“There’s nothing that says that the state has to provide capital to Air France all alone,” he added.

Sources previously told Reuters that Air France KLM is in talks with banks to receive up to 6 billion euros ($6.5 billion) in state-backed bank loans.

French website La Tribune has since reported that the group was seeking up to 10 billion euros, and nearly 8 billion specifically for Air France.

The 20 billion euros in state bailout funds are part of a broader 110 billion euro package of economic rescue measures, which also includes tax and payroll charge deferrals and funding for state-subsidised furloughs.

The government is also offering state guarantees of up to 90{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} on business loans from commercial banks worth a total of 300 billion euros. Guarantees are capped at 70{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} and 80{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of the loan value for big groups under the programme.

Le Maire said that rescue package also included 1 billion euros that could be loaned directly by the state to the most fragile companies that cannot get bank loans and on condition they agree to restructure.

Meanwhile, Le Maire said he had asked property owners to cancel three months of rent for companies with less than 10 employees and said bigger firms should seek to negotiate similar deals with their landlords.

Reporting by Leigh Thomas; editing by Grant McCool

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