COVID-19: EU approves bailout for Air France despite competition concerns

Tuesday 6th April 2021 18:45 BST

Ryanair was commenting following news that France will contribute up to €4bn (£3.4bn) to a recapitalisation of Air France-KLM and more than double its stake in the airline group to almost 30%.

The aid package - approved by the European Union on Tuesday - comes as the airline, like many around the world, struggles with the effects of the COVID pandemic.

In return for the funding, Air France will relinquish 18 take-off and landing slots at Paris-Orly airport (about 4% of its allocation there).

But the reallocation of the slots will be restricted to aircraft based at Orly with crews employed on local contracts, a move that would freeze out many low-cost competitors.

Ryanair said in a statement: "This latest tranche of state aid to Air France combined with these ineffective remedies will damage competition in the air transport market for decades to come.

"The 18 slots that Air France is being required to make available is nowhere near enough to allow others to offer a competitive challenge to Air France's dominance at Paris Charles de Gaulle and Paris-Orly airports."

Similar fears were voiced by easyJet chief executive Johan Lundgren, who said he was "concerned about the scale of these bailouts".

He told Sky's Ian King Live programme: "I'm not against aid as such, because to some extent this (the pandemic) has gone way beyond what you can expect the industry to deal with.

"I think it's the scale and the billions and billions being pumped into some of the legacy airlines out there.

"If that money and funds are not there purely to survive but actually to grow market share and take advantages and for investment that they otherwise couldn't afford, that's not fair and that distorts the level playing field and we can be very mindful to make the competition authorities aware of that."

The aid package for Air France was welcomed as "good news" by French Finance Minister Bruno Le Maire, although he admitted that the slot allocation restrictions had been "one of the sticking points" in talks with Brussels.

Air France-KLM chief executive Benjamin Smith said the restrictions would protect Air France's budget carrier Transavia from unfair competition.

He added: "These first recapitalization measures are an important milestone for our group in this exceptionally challenging period.

"They will provide Air France-KLM with greater stability to move forward when recovery starts, as large-scale vaccination progresses around the world and borders reopen."

Air France-KLM expects an operating loss of about €1.3bn (£1.1bn) for the first quarter of 2021 and the group received €10.4bn (£8.9bn) in government-backed loans last year.

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