KLM Cityhopper Embraer E175 and Air France Airbus A318
Picture 1 taken by Josh Clarke @clarkeaviation on Instagram and picture 2 taken by Dan Gallagher @theirishaviator
Air France-KLM have secured an €11 Billion bailout. They ended up securing terms with banks, institutions and the French government over financial support. The group have announced on the 24th of April that they have secured €7 billion to help Air France who is struggling financially with this Covid-19 pandemic. KLM have also secured €2-4 billion from the Dutch government. However, it is unconfirmed what their plans with the support is.
According to a press release, they are splitting the money between two components. One is a €4 billion state-backed loan. This was granted by six banks and the government is guaranteeing up to ninety percent of the loan. This has a maturity of 12 months and has two consecutive one year extensions.
On top of that, they will be using the remaining €3 billion as a direct shareholder’s loan from the state. This has a maturity of four years and with a two consecutive one year extension options. However, this funding will need to be cleared by the European Commission. This money will go a long way as the Air France’s fleet is currently grounded due to travel restrictions.
The Air France-KLM chair Marie Couderc and chief executive Benjamin Smith have expressed their gratitude to the French government and the group’s banking partners for their help. Couderc has stated that the move shows the firm’s significant role in servicing France and the Netherlands. She also vows that all board members and employees are going to prove themselves worthy. Smith is eager to help the company get back to work once it comes out the other side of this pandemic. He stated to the press that: ‘This aid, along with the Group’s action plan, will enable us to withstand this crisis and foresee the future of Air France-KLM with ambition and determination.’ ‘We are a strong Group and we are united in face of this crisis. I would like to once again salute the exceptional commitment of our employees for their dedication to the repatriation of our fellow citizens, the transport of medical equipment, and maintaining the essential links with territories.’
The Dutch state is ready to confirm its support terms for KLM. Discussions between the two airlines is still ongoing. Since KLM is such a noticeable presence in the Netherlands, it appears to be that they will not need to worry financially. Overall, many staff members for the Group are delighted to hear that the group has a strong backing.
The Air France-KLM Group was established on the 5th of May 2004 when the two airline’s merged. They are both SkyTeam airline alliance members and are now an airline holding company incorporated under French Law. This makes this headquarters located at Charles de Gaulle Airport, Paris. The Group have had many interesting experiences over the years. Air France-KLM along with Delta Airlines (their partner) were thinking of investing with Japan Airlines, the largest airline by revenue in Asia. However, they were experiencing financial problems so they weren’t able to do so. The Group along with Delta and American Airlines discussed investing $200-300 million to help Japan Airlines. In the end, Japan Airlines ended up strengthening its partnership with American Airlines and OneWorld Alliance which included the joint application of antitrust immunity approval on transpacific destinations. Other events that occurred are when the Group and Delta were working together to examine a bid for Virgin Atlantic as Richard Branson had a 51% stake and the rest is held by Delta. They were also categorised as one of the world’s 10 safest airlines in 2013. With many years of history for the Group, it would have been a pity to see them go. However, with the new support, it is likely we will see them returning to the skies stronger than ever after this pandemic.
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