How the state in France will protect Air France
France rises to 28.6% of the Air France-KLM group and does not exclude other interventions in case of need. All the details
France rushes to the aid of Air France. Once again.
After the 7 billion euro aid granted during the first phase of the pandemic, Paris grants the airline new economic aid, bringing its stake in the group to 28.6%. A stake that, reassures the commissioner for state investments, Martin Vial, will not rise above 30%.
All the details.
THE CAPITAL INCREASE
In recent days, with the blessing of Brussels, the Franco-Dutch group has completed a capital increase of just over a billion euros, of which 593 million from the French state, which with the new intervention has brought its share at 28.6%.
THE CONVERSION OF LOANS
Paris also converted three billion euros of direct loans into equity, allowing the group to reduce the group's debt, amounting to 11 billion euros.
The two airlines also proceeded "successfully" to issue 3 billion euro of bonds with no repayment maturity, which were "fully subscribed by the state". This is a step that should lead the group to return to the markets for financing, although other operations will be needed to align the accounts.
NO MORE HELP FROM THE FRENCH STATE?
On the other hand, the aid from Paris should be over. The state, reassures a senior official of the French Ministry of Economy, does not intend to increase its share in the airline group, as long as there is not a "serious economic disaster".
THE WORDS OF THE STATE INVESTMENT COMMISSIONER
"Today we are below 30% and we do not intend to exceed 30%, unless there is another serious economic disaster that would lead the state to come to the aid of Air France-KLM," said the Commissioner for Investments. state, Martin Vial, to BFM Business.
COMMITMENTS
Meanwhile, in exchange for the new aid, the airline will have to make slots available in the saturated Paris Orly airport, selling 18 slots. At this airport, “Air France has significant market power. These provisions give competing carriers the opportunity to expand their activities at this airport ”, commented Margrethe Vestager, vice president of the EU Commission on the occasion of the green light for state aid.
DIVIDENDS AND COUPONS
It's still. Pending the repayment of the recapitalization, “Air France and its holding company are subject to the prohibition of dividends, payment of non-compulsory coupons and repurchase of own shares. Furthermore, until at least 75% of the recapitalization is repaid (in accordance with the provisions of the temporary framework), a strict limitation of the remuneration of the members of their management applies, including the prohibition of bonus payments ".
OBJECTIVE: REPURCHASE OF THE STATE SHARE
The objective of the conditions, explains the Commission, is to encourage Air France, its holding company and its owners to repurchase the State stake obtained following the recapitalization.
THE PROGRAMS OF THE FRENCH STATE
In the meantime, Paris is committed "to developing a credible exit strategy within 12 months of granting the aid, unless state intervention is reduced to below 25%", announces the Commission itself.
THE NUMBERS
In 2019, the Air France-KLM group recorded an annual operating profit of around 750 million euros, but the pandemic weighed down corporate accounts. The group ended 2020 with a net loss of 7.08 billion euros , with a turnover that fell by 59%, to 11.09 billion.
STATE AID DURING THE FIRST WAVE OF THE PANDEMIC
The group has received important aid from the governments of the respective Air France-KLM companies to overcome the pandemic crisis: France and the Netherlands, which equally control 14% of the group, have put up to 10.4 billion (7 billion from France ).
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/come-lo-stato-in-francia-proteggera-air-france/ on Wed, 21 Apr 2021 13:38:41 +0000.