Air France-KLM is moving towards a 10 billion euro ($10.9 billion) government-backed rescue deal, sources stated, after France agreed to greater guarantees on loans designed to tide the airline group via the coronavirus crisis.
Paris is able to vouch for 90% or more of the bank loans to Air France, rather than the 70% initially offered, two individuals with knowledge of the matter said. The increased ensures were first reported by La Tribune on Wednesday.
Air France-KLM representatives and the French finance ministry declined to remark.
Major airways, including Germany’s Lufthansa, are negotiating government aid deals as they grapple with the global air travel shutdown and deep uncertainty over the recovery scope once the pandemic eases.
Banks had been holding out for an improvement on the 70% French ensures offered for about 4 billion euros in loans to Air France, to be accompanied by close to 2 billion euros in Dutch supported lending to KLM.
The entire package for the Franco-Dutch airline group as a whole now amounts to nearly 10 billion euros, two sources stated, confirming earlier reports in La Tribune and other French media.
Along with the guaranteed bank loans, Air France is probably to draw on an authorities emergency fund, increasing its total support to around 8 billion euros, the sources stated.
Group Chief Executive Ben Smith is preparing to speed up a planned restructuring of the Air France short-haul network and the expansion of low-cost division Transavia, resulting in possible job reductions in France.