Air-France KLM consortium needs money to survive. Lots of it

Air-France KLM consortium needs money to survive. Lots of it

With everything closed during these difficult times, there's not a lot people can do. Airlines keep on making flight cuts, cutting costs and staff while asking for financial aid.

Things don't look too golden for one of the giants of the airline industry, Air France-KLM. During the past few days, the company has been in talks with BNP and Societe Generale to find a way to refinancing. Nothing can be said for sure about this matter at the moment, but analysts familiar with the industry see increased volatility in the near future.

The giant turned to the governments of the countries that own a piece of Air France-KLM, France, and Holland. Each holds 14% of the company. Discussions have started to obtain loans of billions of Euros, which will be guaranteed by said governments.

The company reduced the number of flights by more than 90%, and also cut 2,000 positions permanently.

Bruno Le Maire declared on Thursday that "The French government is prepared to support Air France-KLM to keep the Franco-Dutch air carrier intact as it is," but he didn't specify what kind of support he wants to provide. A loan of 6 Billion Euros can be helpful as the company struggles through the Coronavirus shutdown.

Also, in Europe, Air France-KLM's rival, Lufthansa, is said to receive an emergency fund with an 80% state guarantee.

In the U.S., the aviation industry received on March 25 a $58 billion bailout already.

In the future, more companies are expected to follow suit, except Ryanair and Wizz Air, according to Citi analyst Mark Manduca.

Read more about what happened with airlines since the Coronavirus became pandemic here.


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Sources: reuters.com, forexlive.com, businesstimes.com.sg

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