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© MI News/NurPhoto A KLM Embraer E190 lands at Amsterdam, Netherlands on 12th August 2020 only days before a crushing blow
to the tourism sector as the Netherlands, France and Malta were added to the UK quarantine list.
(Photo by Robert Smith/MI News/NurPhoto via Getty Images)
Air France-KLM seeks new €6bn bailout
Air France-KLM seeks new €6bn bailout
Credit: https://www.msn.com/en-gb/news/world/air-france-klm-seeks-new-6bn-bailout/ar-BB1b7MwO?ocid=msedgntp
''Europe’s biggest airline bailout is poised to get bigger, as Air France-KLM targets as much as €6bn (£5.3bn) of fresh funds to get through the Covid pandemic. The French and Dutch governments are discussing providing support to the struggling carrier by the end of the year, according to sources.
Air France-KLM shares fell more than 6pc on Wednesday after Le Monde first reported the story.
The loss-making airline is in talks to receive a capital injection of €3bn from France and €1bn from the Netherlands, the newspaper reported. The plan would aim to keep the existing shareholder balance and avoid a nationalisation. “There is no hurry, but we cannot wait till the end of 2021,” Dutch finance minister Wopke Hoekstra said. “It will be a discussion for the upcoming months or half a year.” The French finance ministry said Air France “has no short-term need for cash” and that the two countries are considering the best ways to render the company’s balance sheet sufficiently solid.
An Air France-KLM spokeswoman declined to comment.
The funding would come on top of a €10.4bn government bailout earlier this year. The cash helped the airline through the initial shock of the global pandemic that grounded jets worldwide and laid low airlines. However, the aid came in the form of direct loans and guarantees that left Air France-KLM with too much debt and operations that have yet to recover amid a resurgence of the virus. The new funds could come in two stages, with the airline raising an additional €2bn from capital markets in the first quarter of next year, according to Le Monde. The operation could include the issuance of so-called “hybrid” loans.
Structuring the package to avoid nationalisation will be critical given France and the Netherlands each own a 14pc stake. It’s not clear whether any of the existing bailout loans would be converted into equity. French transport minister Jean-Baptiste Djebbari said last month that the talks will raise fundamental questions about the way Air France-KLM, created in a merger more than 15 years ago, is structured and backed by the two countries.
Last month, the Dutch government approved its €3.4bn share of the first bailout after a showdown with KLM pilots over pay. French finance minister Bruno Le Maire has said the state could provide more aid, but nationalisation was not the right solution. Air France-KLM is considered a matter of national sovereignty for the French government, which has vowed to plough more public funds into the carrier to help it survive. The carrier, which employs about 90,000 people, has enough liquidity for the short-term, chief executive Ben Smith told Les Echos earlier this month.
Air France has accelerated a job-cutting plan to include the equivalent of 8,500 positions by 2022, while KLM plans to eliminate as many as 5,000 workers this year.''
Covid-19 has changed everything, its time to reset projects, undertakings and setting the future with the reality of the times we're experiencing. Those who thought they will continue to bulldoze others should wakeup and smell the coffee.
