French govt pledges €15bn bailout for aviation sector

The French government earlier this week declared a state of emergency in its aviation industry and pledged a bailout package of €15 billion for the sector where thousands of jobs are at risk as Covid-19 continues to wreak havoc for the travel industry.

At a press conference in Paris, Finance Minister Bruno Le Maire said: "We are declaring a state of emergency to save our aeronautics industry so that it can be more competitive. 

"If we hadn't intervened right away, a third of the jobs in the sector would have disappeared... that's around 100,000 of the 300,000 direct and indirect jobs in the sector."

For decades, the pan-European aircraft manufacturer Airbus, based in the French southwestern city of Toulouse, has supported countless suppliers and service providers in the region and across the country. 

Many new orders having been cancelled or put on hold indefinitely, and airlines across the world having to keep planes on the ground due to the imposition of travel restrictions. There are also concerns that a recovery could take several years in the case of new hygiene rules whereby middle seats will have to remain empty.

According to the International Air Transport Association (IATA), airlines have parked up to 90% of their aircraft, some 4.5 million flights have been cancelled so far, and an estimated $314 billion (€275 billion) in revenues will be lost this year.

The International Civil Aviation Organisation has estimated the coronavirus pandemic will reduce the number of airline passengers by 1.5 billion by the end of the year.

Earlier this year, the French government announced that Air France-KLM would receive €7 billion in loans after the company posted a €1.8 billion loss in the first quarter. 

The money will allow the airline to purchase new planes with improved fuel efficiency and fewer emissions, an increasingly pressing concerns among more environmentally aware flyers.

Defence Minister Florence Parly, who was also present at Tuesday's press conference alongside Environment Minister Elisabeth Borne, said €600 million of planned military orders would be accelerated, including the purchase of three Airbus A330s that will be converted to refuelling planes, and eight Caracal troop transport helicopters.

The French military will also double its orders reserved for small and midsize firms, to some €100 million, to develop light surveillance planes and drones, "ensuring 1,300 jobs for the next three years," Parly said.

Le Maire dismissed concerns that the United States or other countries would protest the state aid as unfair help, amid a long-running feud at the World Trade Organisation over subsidies to Airbus and its American rival Boeing.

"We're not going to be the village idiots who let hundreds of thousands of jobs be destroyed, and the skills they represent... by saying 'sorry, those are the rules, we have no choice'," he said.

"We play by the international rules, but we also note that the American government is massively helping its aviation industry, which is perfectly understandable, and it seems that China is doing the same," he said.

Governments worldwide have provided airlines with $123 billion to help weather the coronavirus storm, the IATA said last month, though it warned the assistance was adding to surging debt levels that would eventually need to be repaid.

The support for the aviation sector comes after French President Emmanuel Macron promised last month €8 billion for the auto sector, with a focus on developing the electric vehicle market.

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