Air France aircraft

We told you about this two weeks ago, when the Air France-KLM group was in negotiation phase with the French and Dutch governments on a potential financial assistance of €6 billion.

 

Between €9 and €11 billion of public aid

Finally, the French government will grant 7 billion euros to the airline group to the Air France company. The financing will be structured around two axes.

The first will take the form of a State-guaranteed loan for an amount of 4 billion euros. This 12-month loan will benefit from a 90% guarantee from the French State, and includes two possible extensions of one year in a row, according to the wishes of the Air France-KLM group's management.

The second is a shareholder loan, paid by the French State because of its 14.3% stake in the group. This loan is also for 12 months and has the same extension conditions as the first one.

On the Dutch side, "the government intends to provide KLM with financial support of €2-4 billion," said Dutch Finance Minister Wopke Hoekstra.

Thus, government aid to the Air France-KLM group will total between €9 and 11 billion.

 

Conditional aid

However, this aid does not come without conditions, warns Economy Minister Bruno Le Maire. On the one hand, conditions of profitability. On the other hand, the obligation for Air France to "become the most environmentally friendly airline", the Minister indicates. This is even the condition to which it is "most attached", he adds.

Moreover, while this aid will enable the Franco-Dutch group to make up its daily deficit of €25 million, its scope will not be limited to the survival and maintenance of the group's activity.

Indeed, the financial aid will make it possible to avoid a catastrophic domino effect, with Air France representing nearly 350 000 direct, indirect and induced jobs. But it will also make it possible to settle the airline's disputes with its passengers.

 

Compensation and repayment possible, but not facilitated

Due to a lack of liquidity, Air France, like many airlines, has waived the repayment obligation imposed by European regulations. Since the beginning of the Covid-19 crisis, the airline has offered, with the support of IATA, as only compensation to its passengers affected by flight cancellations, credit notes to be used for future trips.

With an inflated cash position of 7 billion euros, it will now be difficult for the French airline to dodge claims for reimbursement and compensation any longer. However, the CEO of the Air France-KLM group, Benjamin Smith, has warned that a return to normal is not expected for another two years. Under these circumstances, there is a high risk that compensation and reimbursement of passengers will not be a priority for the air carrier.

To ensure that you can effectively assert your rights in these times of crisis, choose Sky Indemnity. You can rely on the legal expertise of our team to recover what you are entitled to under European Regulation EC 261/2004. And all this without having to carry out any tedious procedures, as your claim will be handled from A to Z by our legal team.

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