“Heibel between Air France KLM and France on loan” | Financial

This is reported by the French newspaper Les Echos. The company came to a complete halt as a result of the crown pandemic. As a result, Air France KLM and the banks are engaged in “intense” talks over a multibillion-dollar loan, rumored to be € 6 billion. Air France KLM CEO Ben Smith wants the French state to guarantee 90%, as does the Netherlands.

But France is not expected to exceed 75%, despite the statement by French Finance Minister Bruno Le Maire earlier this week that he is ready for massive support to save “the jewel in the crown.”

More expensive

The lower collateral makes loans more expensive for Air France, but it can also put KLM on the wheels if the bank consortium and states move with a single loan package. The biggest guarantee from the Dutch state probably has to do with the quantity size for KLM. Experts inform De Telegraaf that KLM would need less than € 2 billion at this stage. However, since the Dutch state is also the second shareholder of the holding company in Paris, you may also need to guarantee Air France. The line in the dilemma surrounding crown support so far has been that the Netherlands would guarantee loans to KLM.

High costs

Before the crown crisis, KLM was slightly better financially. Air France has too high a cost base if structural labor reforms fail for years. KLM decided to run more hours from 2015, in order to fly more routes. As a result, KLM’s passenger numbers, turnover and earnings grew. The French division has not survived this battle to this day. In 2019, Air France earned just € 280 million in its first full year under the leadership of Ben Smith, almost half of which is attributable to the maintenance company.

Two years

Both airlines are currently receiving state aid to cover labor costs. This refers to schemes that are available to the entire business community. Billions of banks are for the period after that. Air France chief lady Anne Rigail previously said it could take another two years for air traffic to normalize. On Thursday night, Air France KLM announced that the money would really run out after the summer, if there were no additional financial support. Airlines are still expected to experience travel restrictions in the first post-crown period. As a result, they cannot make optimal use of the fleet. Furthermore, it is still unclear whether business travelers will return to the extent that they did before the crown crisis due to the impending recession and the advancement of video conferencing.