French government steps in to support its aviation industry with a $17bn bailout package

FRANCE has intervened in the crisis afflicting the global aviation industry by agreeing to make $16.9bn available to its airlines in a bid to stimulate the sector as it reels from the effects of the shutdown brought about by the coronavirus pandemic.

With the global lockdown, aviation has been totally grounded and with several airlines being very hard-hit, threatening their very existence. In March, Alexandre de Juniac, the chief executive of the International Air Transport Association (IATA), warned that revenue losses across the industry would likely top the £90bn.

Air France-KLM for instance, said it would be reducing capacity by between 70% and 90% at the start of the crisis, prompting the French and Dutch governments to say that they were studying all possible means to support the group. Now, the IATA fears that the resulting closures of international routes as a result of the pandemic, could result in $252bn in passenger revenue losses for the year.

With the lockdown being gradually eased, most airlines are resuming operations and France has immediately stepped in with finance minister Bruno Le Maire promising nearly $17bn worth of support for the sector. He added that the plan includes providing €1.5bn to spur research on a future carbon neutral plane.

Mr Le Maire said: We are declaring a state of emergency to save our aeronautics industry so that it can be more competitive.” It is not yet clear if all the money will be in the form of a grant or if some of it will be grants too.

Other airlines such as Virgin Atlantic are also in dire straits as it groans under the weight of the crisis. Virgin Atlantic’s owned Richard Branson said the company is seeking a £500m ($624m) rescue package, warning that the airline could fold if it does not get a bailout.