Air France gets EU nod for 4b-euro aid

THE EU approved a plan on Tuesday by the French government to inject up to four billion euros (S$6.3 billion) into Air France, hit by a collapse in passenger traffic during the pandemic.

The agreement, worth US$4.7 billion, follows weeks of negotiations with the EU commission, which must ensure that state aid does not give companies an unfair advantage.

In return for the green light, the commission, which is the EU's anti-trust regulator, said Air France would relinquish about 18 slots per day at Orly, Paris' second-largest airport after Charles de Gaulle.

"This gives competing carriers the chance to expand their activities at this airport, ensuring fair prices and increased choice for European consumers," EU competition commissioner Margrethe Vestager said.

French Finance Minister Bruno Le Maire said the EU had also allowed the French state to raise its stake in the national carrier to 30 per cent, up from the current 14.9 per cent.

Air France posted a 7.1 billion euro loss in 2020 as its business, like that of the rest of the world's airlines, suffered from coronavirus restrictions which all but grounded global air traffic.

Rival airline Ryanair, whose criticism of state subsidy for legacy airlines often finds a sympathetic ear at the European Commission, has lambasted previous French aid for Air France, saying it distorts competition.

The Irish-based low-cost carrier has long railed against the support given to national champions, and is often backed by Brussels.

Ryanair - Europe's biggest airline in terms of ridership - is also seeking to challenge Germany's massive bailout of Lufthansa in the EU courts as well as schemes in Spain, the Netherlands, Denmark and Portugal.

The Netherlands' flag-carrier KLM, which forms an alliance with Air France, will not benefit from the aid. AFP