The announcement follows the Group’s statement in early April that a liquidity injection would be necessary in the third quarter of 2020 given the major impact of the coronavirus (Covid-19) crisis, which was expected to weigh heavily on its EBITDA.
For Air France, the support mechanism is comprised of a French state-backed loan of 4 billion euros granted by a syndicate of six banks; and a direct shareholder’s loan of 3 billion euros from the French state to Air France-KLM with a maturity of four years. The agreements are still subject to approval from the European Commission.
“This aid, along with the Group’s action plan, will enable us to withstand this crisis and foresee the future of Air France-KLM with ambition and determination,” said Benjamin Smith, CEO of the Air France-KLM Group.
The aid mechanism is expected to enable the Group to provide Air France with the means necessary to meet its obligations by continuing its transformation in order to adapt in a sector that the global crisis will severely disrupt.
For KLM, the Dutch government, which has 14% share in Air France-KLM, intends to provide an aid package in the form of state guarantees and loans amounting to between 2 and 4 billion euros. Details of the aid package and the conditions that will be attached have not been released as discussions continue between the Dutch government and KLM.
“Air France and KLM are currently weathering a storm of unparalleled magnitude,” said KLM President & CEO Pieter Elbers.
The Air France-KLM Group was created in 2004 when a merger took place between Air France and KLM.