The tails of Air France aeroplanes parked at Charles-de-Gaulle airport near Paris, France. Picture: REUTERS
The tails of Air France aeroplanes parked at Charles-de-Gaulle airport near Paris, France. Picture: REUTERS

Air France-KLM and Airbus are poised to tap French government-backed loans as the coronavirus outbreak drains corporate cash reserves, according to people familiar with the matter.

With the aviation industry among sectors most under pressure from the pandemic, the airline and aircraft maker, based in Paris and Toulouse, respectively, will be among the first firms to receive French support, according to the people, who asked not to be named discussing private negotiations.

Airbus has also signalled to the German government that it might need to tap a state loan facility, a government official there said.

Airbus said it’s having regular, private dialogue with home-nation governments. Spokespeople for Air France-KLM and the French finance ministry declined to comment.

Like other carriers, Air France-KLM has seen demand all but wiped out as people stop travelling and nations close borders, with the company saying it may cancel 90% of flights.

The situation has been worsened by political clashes over French and Dutch state holdings in the airline group, with France saying last week that it will consult the Netherlands before stepping in.

Reversal of fortune

Airbus is grappling with an unprecedented reversal in fortunes as customers push back against deliveries and as new orders dry up with build rates at record levels.

The manufacturer has not yet said whether it will dramatically slow production, but for both companies state-backed credit lines will provide a safety net as they hunker down to protect vital cash reserves.

The company plans to resume production on Monday at plants in France and Spain, increasing the pace over coming days while following health and safety guidelines for keeping workers apart, an Airbus spokesperson said.

Airbus said it participated in a meeting with the German economy ministry, alongside representatives of airlines and airports. Chancellor Angela Merkel has earmarked $590bn of lending to support business, with German airline Deutsche Lufthansa saying it has held talks with a state bank.

French President Emmanuel Macron promised to guarantee up to €300bn of bank loans on Monday in an effort to bolster firms threatened by the impact of the virus, saying that France is “at war” and that all government and parliamentary forces must be focused on fighting the epidemic.

While governments around the world have been laying out the bare bones of national rescue packages, most have yet to specify which companies and sectors will be a focus for bailouts.

Scandinavian aid

Countries in Scandinavia have provided the most detail on aid to airlines, with Sweden and Denmark lining up behind SAS, in which they each have stakes, and Finland backing Finnair, in which it also has a holding, boosting the stock 13%.

Norway said that Norwegian Air Shuttle could get the equivalent of $263m, though most will be available only if commercial institutions also dip into their pockets. The bonds hit a record low on Friday and the stock fell as much as 12%.


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