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France earmarks US$17b for struggling aerospace industry
[PARIS] The French government's rescue plan for the struggling aerospace industry includes billions of euros in financial aid for suppliers hit by the Covid-19 pandemic.
The measures, worth US$17 billion, also include an extension of part-time work subsidies to help companies lower payroll costs, and funds for the development of less polluting air travel, Junior Transport Minister Jean-Baptiste Djebbari told Radio Classique Tuesday, ahead of the official announcement. The package contains loan guarantees already extended to companies including Air France-KLM
The aid package is aimed at bolstering European plane maker Airbus SE and its constellation of hundreds of French suppliers that have been hammered by measures to contain the coronavirus. New aircraft orders have dried up and the grounding of planes has hurt the sale of equipment and services. The industry employs about 300,000 people in France and generates 58 billion euros (S$90 billion) in annual revenue.
Airbus last week said it garnered no new orders and delivered just 24 new planes in May. European carriers Deutsche Lufthansa AG and Air France-KLM are getting state bailouts worth billions of euros after air travel was reduced to practically nothing at the height of the pandemic.
Included in the package are 7 billion euros worth of loans and guarantees the government already extended to Air France-KLM. The funds are tied to a reduction in carbon emissions and services on its domestic routes. Finance Minister Bruno Le Maire has also said the carrier should be a "good customer" for Airbus.
The plan for the aviation sector comes as part of a series of stimulus packages worth about 40 billion euros that have included funds for tourism and the auto industry.
As the French economy starts to reopen following a strict lockdown period, warnings have multiplied about the effects on companies. Louis Gallois, chairman of the supervisory board of PSA Group, has said some big and medium-sized French companies will need state bailouts and the government will have to take stakes.
Mr Gallois echoed Martin Vial, head of the country's state shareholding agency known as APE, who has said the economic shock is taking its toll and that some 20 big companies that have been made vulnerable will undoubtedly need their capital bolstered.