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.
An index launched a year ago to give investors greater exposure to China’s Internet giants is now the world’s worst-performing major technology gauge. The Hang Seng Tech Index has been on a roller-coaster ride in the past 12 months. The gauge, which marks its first anniversary on Tuesday, was up 59 percent at its February peak, but has since seen more than US$551 billion in market value wiped out amid Beijing’s clampdown on the sector. That has reduced its gain to nearly 6 percent, compared with more than 40 percent for the MSCI World Information Technology Index and the NASDAQ-100 Index. The
EDUCATION AS WELFARE: New regulations threaten to upend the lucrative private education sector that teaches the public school curriculum to paying families China unveiled a sweeping overhaul of its US$100 billion education tech sector, banning companies that teach the school curriculum from earning profit, raising capital or going public. Beijing on Saturday published an array of regulations that together threaten to overturn the sector and jeopardize billions of dollars in foreign investment. Companies that teach school subjects can no longer accept overseas investment, which could include capital from the offshore registered entities of Chinese firms, according to a notice released by the Chinese State Council. Those in violation of that rule must take steps to rectify the situation, the country’s most powerful administrative
Facebook Inc on Wednesday reported its profit doubled in the second quarter as digital advertising surged, but warned of cooler growth in the months ahead in an update that sent its shares sinking. Profit rose to US$10.4 billion on revenue of US$29 billion, a 56 percent increase from last year, mainly from an increase in ad revenue, Facebook said. The number of people using the social network monthly climbed to 2.9 billion, a year-on-year gain of 7 percent, while about 3.5 billion people used at least one of the company’s apps, including Instagram, WhatsApp and Messenger. “We had a strong quarter, as we
‘IN ITS INFANCY’: The company’s 12-inch fab in Arizona is to be its first major overseas chip manufacturing site, while the fab in Japan would be its second, if it is constructed Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating the feasibility of constructing a semiconductor fabrication plant in Germany as it continues to expand overseas, it said yesterday. A shareholder at the contract chipmaker’s annual general meeting in Hsinchu City yesterday asked about the possibility following media reports earlier this month that TSMC was approached by the German government about building a chip fab in the country, as Europe joins the US and China in establishing local chip supplies in a bid to avert future chip shortages. “About the German fab, we are seriously looking into it, but it is still in its
RSS