In accordance with the temporary framework to support the economy and to ensure businesses sufficient liquidity to preserve the continuity of their economic activity during the coronavirus outbreak, on 6 April 2021 the Commission approved the €4 billion supplied by the French government for the recapitalization of Air France through its Holding company.

Despite an annual operating profit of approximately €750 million in 2019, indeed, the restrictions introduced by Member States to limit the spread of the coronavirus resulted in a significant reduction of the airline’s activities and major operating losses. As part of a bigger recapitalization plan, therefore, the aid consists of the conversion of the €3 billion State loan already granted into a hybrid capital instrument and of a capital injection in a limit of €1 billion through the subscription of new shares in a share capital increase opened to existing shareholders and the market.

According to the Commission, the measure is in line with the conditions set out in the Temporary Framework inasmuch as it is necessary and appropriate to remedy a serious disturbance in the economy of a Member State, and it aims at restoring the liquidity of Air France and its Holding company while limiting competition distortions. More particularly, the recapitalization plan will, amongst other things, i) prevent an insolvency of Air France and its Holding company, ii) make sure that the beneficiaries cannot use the aid to support economic activities of integrated companies that were in financial difficulties prior to 31 December 2019, so that they do not unduly benefit from the funding to the detriment of fair competition in the Single Market, and iii)include an obligation to publish information on the way the aid is used.

Marco Stillo