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Lufthansa mulls options as Air France state aid strings revealed

Lufthansa largest European airline

Lufthansa boss Carsten Spohr would like to receive state support, but does not want state management. His motivation becomes clearer when one takes a look at France.

The EU’s competition watchdog on Monday approved French state aid of €7 billion ($7.66 billion) for Air France, consisting of €4 billion in state-guaranteed bank loans and €3 billion in loans directly from the state.

The Dutch government promised to contribute €2 billion to €4 billion to KLM. The French and Dutch governments each hold 14% of the Air France-KLM Group, which was created by a 2004 merger of the two national carriers.

The European Commission noted the importance of Air France for the French economy and the role it had played in repatriating stranded citizens and transporting medical supplies.

Several EU governments are planning to give billions of euros in aid to airlines. Germany’s Lufthansa, the region’s biggest carrier, is working on a rescue from Berlin, while Italy wants to take over bankrupt Alitalia. This aroused some concern among smaller member states.

While Germany makes up for about a quarter of the EU’s GDP, it accounts for 52% of the total value of the emergency coronavirus state aid cleared so far, Commission data show. France and Italy share joint second place, each with 17% of the total.

The strings attached

The French aid, however, is not a blank check, says French Finance Minister Bruno Le Maire. “The aim of Air France must be to become the airline that guarantees the most sustainable protection of the planet,” he noted.

State aid was linked to the following conditions:

Air France needs to become more profitable and competitive.

Air France is to reduce its CO2 emissions on long and medium-haul routes by 50% per passenger and kilometer by 2030; on flights within France until 2024.

By 2025, at least 2% of the fuel should come from a climate-neutral source.

 

 

 

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