It seems the EU has approved French state aid for AF, so Ryanair's posturing is moot.– The European Union approved 7 billion euros ($7.6 billion) in loans and guarantees that the French state is providing to Air France.
Air France will get 3 billion euros ($3.28 billion) in direct loans from the French state and a 4 billion euro ($4.37 billion) bank loan guaranteed by the state, the airline said in a statement.
https://www.detroitnews.com/story/busin ... 111658686/
France would never accept that it couldn't save AF; Germany would never accept that it couldn't save LH. When EU rules don't work for Germany and France, EU rules are changed.
I think strictly legal speaking EU hasn't changed rules to accommodate AF, what they did is publicly recognising the current situation as 'exceptional occurrences' termed in the treaty on state aid, and the commission approved a temporary framework to issue fast track approvals. By April EC had already approved 1.9 trillion euros bailouts across EU.
He's just an EU basher. Not interested in the facts, because they are inconvenient.
Strictly speaking, AF's bailout are loans and loan guarantees.
So they get cash, but they need to repay it.
Cash will be burned as they try to stay afloat, so their net assets will deteriorate over time, straining their relaunch.
The only advantage is that they get to service debt with cheaper debt at lower interest rates, but considering how short-term the loans are, the advantage will be minimal.
This is totally different from receiving capital injections like is rumored for LH or OS.
They are getting cash that they don't need to repay and can fully utilise to relaunch and crush competitors in the first years after this.
I wonder if AF-KLM really needed the 10 billions though.
With airplanes grounded, staff at home, loans and leases mitigated (terms extended and deferred principal payments), aircraft deliveries deferred, they should have enough with a billion per year for maintenance, training, aircraft parking, front and backoffice, overhead, interests on debt, required insurance, real estate leases.
They don't have to pay for crew and operational staff, fuel, catering, handling, airport charges, marketing, operational maintenance, etc...
1 billion or 2 million per aircraft per year should be more than sufficient to manage non-capital fixed costs of a gounded airline the size of AF-KLM.
This being said, if they try to get ahead of the demand and end up flying empty aircraft, they're going to blow through the 10 billions in less than a year.
This is one of the big problems facing the relaunch or opening countries again.
When there are no customers or not enough of them, it's better to stay sheltered until enough customers are out there to run efficiently and profitably.
With most of the 50+ generation sheltering and avoiding unnnecessary movements, the most lucrative 30% of the market is not coming back until there is a vaccine. The rest of the market will also bereluctant to expose itself.
Airlines will be in worse shape a year from now than they are today.
So not getting a loan while others are is plain torture, getting a loan is by no means a gift, and getting free money is just unfair.
I would have no problem with the LH Group receiving loans, in tranches correlated to the duration and extent of the fleet groundings.
Same for AF-KLM and IAG.
If the bailouts were structured like that and with clearly defined criteria equal to everyone in the EU, I would even tell MOL that him not getting a loan is the risk you expose yourself when you run a PAN-European airline where you compete with airlines that protect national interests.
But this is not the case here, flag carriers are strategising to make use of the situation to run competitors into the ground and lower labour conditions for their own workforces.