Recapitalization to cost Air France Paris-Orly airport slots?

Ilona Ignatova

The negotiations for the state-backed recapitalization of Air France continue as the airline holds tight on the Paris-Orly slots. 

As one of the conditions of receiving state aid from France, the European Commission demanded Air France to give up 24 Paris-Orly (ORY) airport slots But Brussels’ demands were met by protests from the airline’s pilot unions. On February 3, 2021, French Minister of Finance, Bruno Le Maire, said the country would oppose any requirement for Air France to give up slots at Paris-Orly airport.

“I’ll keep our discussions with the European Commission confidential because I don’t want to create troubles on the market for the national airline,” Le Maire said in the radio interview. The commission “knows we are committed to supporting Air France.”

On February 5, 2021, the French Minister for Transport Jean-Baptiste Djebbari said he was against the plan that would penalize the airline. “It is out of the question that the Air France-KLM group finds itself burdened in competitiveness and weakened because of a negotiation which would not be balanced,” commented Djebbari to La Tribune.

Since the announcement, Le Maire and the European Commissioner responsible for competition, Margrethe Vestager, have been negotiating on the agreement. According to the European competition officer, the demand for giving up the slots is crucial when a state provides recapitalization aid exceeding €250 million to a company. The state must propose “additional measures to preserve effective competition.”

Other European airlines had to comply with state-aid conditions too. For example, Lufthansa (LHAB) (LHA) was asked to give up slots in  return for a €9 billion bailout from the German state. After what she described as a “tough fight”, German Chancellor Angela Merkel managed to divide the 24 slots on two airports, namely Frankfurt and Munich, equivalent to three flights a day for four competitors’ aircraft at each location.

In the financial report of Q3 2020, Air France indicated having suffered more than €1 billion operating loss while its net debt increased by €1.34 billion to €9.31 billion.


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