As Europe gets back to work after the traditional summer break, Air France-KLM CEO Ben Smith will be rolling up his sleeves for the next phase of plans to revamp Air France—plans which have become even more important since the COVID-19 crisis.
Air France-KLM, pledging to step up its restructuring plans as it unveiled a massive quarterly loss caused by the COVID-19 crisis, said it expects capacity to remain at least 20% below 2019 levels in 2021, with a recovery to pre-crisis capacity by 2024.
Air France plans to cut 6,560 jobs by the end of 2022, with a further 1,020 to go from its regional subsidiary HOP! through fleet simplification and restructuring.
Dutch carrier KLM has secured a total of €3.4 billion ($3.8 billion) in government support through a state-guaranteed loan and a direct loan to help it withstand the COVID-19 crisis, adding to the €7 billion France has granted to sister airline Air France.
Air France-KLM posted a net loss of €1.8 billion ($1.95 billion) for the first three months of the year, hit by the devastating impact of the COVID-19 coronavirus crisis on its operations.
The European Commission has approved the French state’s €7 billion ($7.7 billion) package to help Air France-KLM withstand the COVID-19 crisis, saying the plans comply with EU state aid rules and praising the decision to link the funding to environmental targets.
France’s economy minister has told Air France to drastically reduce its emissions in return for the €7 billion ($7.6 billion) in loans the French state has promised the Air France-KLM group to help it survive the COVID-19 crisis.
The Dutch government plans to provide €2-4 billion ($2.2-4.4 billion) in COVID-19 crisis-related financial assistance to KLM, following on France’s pledged €7 billion to help Air France and the Air France-KLM group.
The French state will grant Air France-KLM a total of €7 billion ($7.6 billion) in loans to help it weather the COVID-19 crisis, and longer-term may consider increasing its stake, the Franco-Dutch airline group said April 24.
Air France-KLM’s CEO Ben Smith said he would forego his 2020 bonus and promised to speed up restructuring as the airline group moved closer to securing a multi-billion-euro state-guaranteed loan from France.
Air France-KLM is in advanced negotiations with the French and Dutch governments for state and state-backed loans that would enable the group to face the expected liquidity requirement in the third quarter of this year, according to group executives.
PARIS—Air France-KLM is reportedly hoping to negotiate state-backed loans worth €10 billion ($11 billion) to help it survive the COVID-19 crisis that has cut its activity by around 90%.
Air France-KLM said it had entered “in-depth” discussions with the French and Netherlands governments over the financing the group will need to weather the COVID-19 crisis and is confident the two nations will support it.
Air France-KLM said it would suspend over 90% of planned capacity in April and May because of the global COVID-19 crisis as its own statistics and those of European airports showed massive drops in March passenger traffic.
Air France-KLM is reportedly in talks with the French and Netherlands governments over a state-backed loan of up to €6 billion ($6.48 billion) to help the airline group weather the COVID-19 crisis.
France’s economy minister Bruno Le Maire has pledged to support big companies, including Air France, by any means necessary as the government unveiled an initial €45 billion ($49.6 billion) package of financial aid for struggling businesses hit by the COVID-19 coronavirus crisis.
Ryanair expects “the majority” of its fleet will be grounded while Finnair and SAS are among the latest airlines to stop almost all flights. Air France is also grounding its entire Airbus A380 fleet and KLM its entire Boeing 747 fleet.
Air France-KLM, EasyJet, International Airlines Group and Ryanair all said they will cut most of their flights in the coming days as travel restrictions push demand for air transport close to zero.
