BRUSSELS (AFP) – The European Commission yesterday gave the green light to EUR7 billion (USD7.7 billion) in French state aid to national carrier Air France to cushion the economic fallout from the coronavirus pandemic.
“The European Commission has approved, under European Union (EU) State aid rules, a EUR7 billion French aid measure consisting of a state guarantee on loans and a shareholder loan to Air France to provide urgent liquidity to the company in the context of the coronavirus outbreak,” EU competition commissioner Margrethe Vestager said in a statement.
The EU’s executive body, the bloc’s competition watchdog, loosened its rules on state subsidies in mid-March to make it easier for member countries to come to the aid of companies in financial difficulty as a result of the COVID-19 pandemic.
In the case of Air France, the aid comprised EUR4 billion in bank loans, 90 per cent guaranteed by the state, and EUR3 billion in direct state loans in return for which the airline has committed to improving its profitability and reducing its greenhouse gas emissions.
“France has demonstrated that all other potential means to obtain liquidity on the markets have already been explored and exhausted,” the Commission said.
“In the absence of the public support, Air France would likely face the risk of bankruptcy due to the sudden erosion of its business. This would likely cause severe harm to the French economy,” it said.