EU gives go-ahead for €4 billion Air France state bail-out, despite Ryanair protestations

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The EU has given the green light for the French government to inject up to €4 billion into Air France by increasing its current 14.3% stake in Air France KLM to 30%. The deal has been subject to weeks of negotiations as the EU has always been keen to ensure that any aid given to European carriers does not give them an unfair advantage. To mitigate the situation, the commission, which is the EU’s anti-trust regulator, has demanded Air France to release up to 18 slots per day at Paris’ second-largest airport, Orly. “This gives competing carriers the chance to expand their activities at this airport, ensuring fair prices and increased choice for European consumers,” EU competition commissioner Margrethe Vestager said.

Like airlines worldwide, Air France had been hit heavily by the COVID-19 pandemic and in 2020 posted a €7.1 billion loss. It should be noted that the Netherlands’ flag-carrier KLM, which forms an alliance with Air France, will not benefit from the aid, though in a joint statement Le Maire and his Dutch counterpart Wopke Hoekstra said a recapitalization of KLM by the government of the Netherlands was being looked at.

Rival airline Ryanair has been highly critical of previous French aid for Air France, claiming that it distorts competition. Ryanair, which is Europe’s biggest airline in terms of passenger numbers, is also looking to challenge Germany’s substantial bailout of Lufthansa in the EU courts as well as schemes in Spain, the Netherlands, Denmark and Portugal. However, the French and Dutch ministers defended their support for their airline group. “The connectivity of France and the Netherlands is of great importance for both economies and therefore the recovery of the Air France – KLM Group is in the best interest of the two states,” they said, while further underlining both carriers’ commitment towards environmental stability. (€1.00 = US$1.19 at time of publication.)

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