France and the European Commission (EC) have agreed the outline of a refinancing package for the French arm of Franco-Dutch airline group, Air France-KLM (AF.PA).
French finance minister Bruno Le Maire who announced the news on Sunday did not specify how much money was involved, but did confirmed that the airline group’s board was due to meet on Monday to discuss and approve it.
Any amount will be on top of the €10.4bn ($12.2bn, £8.8bn) in government-backed loans it received last year as the coronavirus pandemic hit its balance sheet.
France and the Netherlands, which own a combined 28% stake in the company, have been in talks for months with the Brussels, regarding a financing plan for the group whose net debt soared to €11bn last year.
In February, the group posted a €7.1bn net loss for 2020, which it largely blamed on the COVID crisis, while revenues declined to €11.1bn euros — this was down 59% compared to last year.
Passenger numbers slumped 67.3% compared to the year before, flying just 34,065 passengers last year.
The group announced that since the onset of the pandemic, it had refunded €2.3bn to customers as planes were grounded and travel halted, of that €0.8bn was during the fourth quarter alone.
But months of talks were held up by the EU's demands that Air France surrender Paris-Orly take-off and landing slots and KLM cede slots at Amsterdam Schiphol in exchange for aid.
Le Maire said the carrier had given up some slots in discussion, but not the 24 initially demanded by the EC. Ceding 24 aeroplane slots would have put Air France on a par with those given up by Germany’s Lufthansa (LHA.DE) in Frankfurt and Munich as part of its state-backed capital rise.
The airline was created in 2004 via the merger of the Dutch flag carrier KLM and its French counterpart Air France.
Global aviation has been hammered by the coronavirus pandemic amid grounded flights and lockdowns.
Many airlines were forced to make difficult decisions in order to save their businesses, including cutting jobs to save cash, while trying to navigate the ever-changing landscape of government measures.
The International Air Transport Association (IATA) said the industry reported an estimated net loss of $118.5bn (£85.7bn) in 2020, a deeper recision of its $84.3bn forecast in June last year.
A net loss of $38.7bn is also expected in 2021, more than double the projected $15.8bn loss six months ago.
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