Air France-KLM in talks on multibillion euro state-backed loan package

[PARIS] Air France-KLM is in talks with banks to receive billions of euros in loans guaranteed by the French and Dutch governments, as the airline group braces for a sustained coronavirus shutdown, sources told Reuters.

The two states, which each own 14 per cent of Air France-KLM, have paused a long-running boardroom feud to address the cash crunch, according to three people close to the discussions.

Details and amounts are not finalised and could change, the people said. Under the most likely scenario, Air France may get as much as four billion euros (S$6.21 billion) in French-guaranteed loans while KLM receives close to two billion euros backed by The Hague, one source said.

The group has appointed BNP and Societe Generale to advise on refinancing, two of the sources said.

Both banks declined to comment.

"We are naturally in constant discussions with both governments," an Air France-KLM spokesperson said, declining further comment.

The French and Dutch governments also declined to comment in detail on the Air France-KLM talks. Both countries have expressed willingness to offer financial help.

"We've been in discussions for a long period of time with KLM and Air France and very specifically with the French state," Dutch Finance Minister Wopke Hoekstra told Reuters on Wednesday. "It's extremely important to help this vital company through these difficult times."

Governments around the world are scrambling to prop up major airlines that are at risk of bankruptcy as the pandemic gathers pace, gutting travel demand and bringing traffic to an indefinite standstill.

The US Senate approved a US$58 billion bailout for the American aviation industry on March 25. In Europe, Norwegian Air and SAS have received pledges of state support, while Lufthansa is poised to receive billions in aid.

REUTERS