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Covid-19 pandemic: Air France’s survival is “guaranteed”, according to the government

French Finance Minister Bruno Le Maire said he would guarantee Air France’s survival after his Dutch counterpart warned that further cost cuts may be needed to weather the industry’s deep recession.

France will do “whatever is necessary to guarantee the survival of Air France”, declared Le Maire on Monday on France 2. “We have already done a lot of things and we will continue. “

French and Dutch government ministers weighed on Air France-KLM’s plans to cut jobs, capacity and planes to respond to the sharp drop in demand caused by the Covid-19 pandemic. The countries, which hold a combined 28% stake in the group, came to the rescue earlier this year with € 10.4 billion ($ 12.3 billion) in loans and guarantees to its constituent carriers, Air France and KLM.

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When asked if the airline was going to weather the crisis, Dutch Finance Minister Wopke Hoekstra said on Sunday that “it’s not taken for granted”.

Air France-KLM must adjust its cost base to deal with the crisis and will have to do even more if the pandemic were to last until the end of next year, he said. The Dutch branch has long been more profitable than Air France, causing tensions within the group even before the pandemic.

Loss record

Air France-KLM posted a record quarterly loss in July and expects “significantly negative” results in the second half of the year. Travel to Europe has resumed in recent months after governments relaxed lockdown measures, although the pace of the recovery has been slowed by new outbreaks in several parts of the continent.

Another sign of political pressure on Air France-KLM CEO Ben Smith, French Transport Minister Jean-Baptiste Djebbari said on Monday that the carrier “can do better” by coordinating a number of its activities, including fleet management.

While he said the planned job cuts are a “huge adjustment” and in line with current thinking about where the industry is heading, he said airlines may need to change their business models in the medium term. due to excessive reliance on business travel.

“No one really knows what the traffic will look like at the start of 2021,” he said, noting that the flights during the summer months were mostly tourist travel and not business travel.

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