The French government has reached a deal with the European Commission allowing it to inject fresh money into flagship airline Air France, it said on Sunday, as the airline’s finances creak under the effects of COVID-19 restrictions
The agreement follows weeks of negotiations with the EU’s executive, which must ensure that state aid does not give companies an unfair advantage.
“We have an outline agreement with European Commissioner Margrethe Vestager about new financial aid for Air France,” French Minister of Finance Bruno Le Maire said on the RTL political broadcast Le Grand Jury.
Photo: Reuters
Air France, of which the French government owns 14.3 percent, will have to give up “a certain number” of slots at Orly, Paris’ second-largest airport after the Charles de Gaulle airport, in return for the green light from Brussels, Le Maire said.
Air France posted a 7.1 billion euro (US$8.34 billion) loss last year as its business, like those of the rest of the world’s airlines, was affected by restrictions which all but grounded global air traffic.
Le Maire would not be drawn on the amount of new funds to be given Air France, saying this was part of discussions to be held with the airline, whose board needs to vote on the deal and was to meet today.
The agreement with the Commission was “very good news for Air France and for the whole French aviation sector,” Le Maire said, adding that negotiations had been “tough.”
The minister declined to say how many slots at Orly Air France would have to give up, but said it would be fewer than the 24 that the commission had initially asked for.
The French government has already given “a lot of help” to Air France to weather the COVID-19 crisis with an initial sum of 7 billion euros and would “not sign a blank check” this time around, Le Maire said.
“There are tens of thousands of jobs involved. Air France is strategic for our country,” he said.
The carrier must become more competitive and continue to reduce carbon emissions, he said.
“The taxpayer is making an effort, and Air France must also make an effort,” Le Maire added.
A European Commission spokesperson said that the executive was in contact with the French government but could not “predict the timing or outcome of these contacts.”
According to EU rules, any government granting more than 250 million euros in aid to a company with “significant market power” had to propose additional measures to safeguard competition, the spokesperson said.
Any fresh capital for Air France would be scrutinized not only by the EU, but also by the carrier’s competitors, which want to make sure that the playing field remains level.
The Air France plan comes as France faces rising deficits and debt because of a weaker economic rebound than hoped.
The annual deficit, which has spiraled as French President Emmanuel Macron’s government tries to prop up the struggling economy with massive spending, is expected to reach 9 percent of GDP this year, Le Maire said.
This compares with an 8.5 percent estimate included in the government’s budget plan for this year, and a three percent deficit limit that EU members must usually respect, but have swept aside as they deal with COVID-19.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure