EU Commission approves €10.4 Billion aid package for Air France-KLM

Simona Mazzeo
credit: bloomberg

Brussels (Brussels Morning) – The EU Commission has approved Dutch and French support steps of €10.4 billion in favour of the Air France-KLM Group.

According to the EU Commission, the French aid effort consisted of a guarantee on bank loans of €4 billion and a loan of €3 billion. The Dutch aid measure includes a guarantee on bank loans of €2.4 billion and a loan of €1 billion. On 4 May 2020 and 13 July 2020, the EU Commission endorsed these two measures notified by France and the Netherlands respectively. The EU Commission discovered the measures to be compatible with EU State aid rules.

Why did the General Court overturn EU Commission decisions on Air France-KLM aid?

On 20 December 2023 and 7 February 2024, the General Court overruled the two EU Commission’s decisions. In its ruling, the General Court assumed that the EU Commission erred in regarding Air France and KLM being the only beneficiaries of respectively the French and Dutch State aid measures. 

In the present decision, the EU Commission has re-considered the measures with the Air France-KLM Group as the heir of both the French and Dutch measures and figured that they would also be consistent with the COVID Temporary Framework or directly with the Treaty.

What criteria did the EU Commission use to assess the French State loan?

Concerning the French State loan, the EU Commission uncovered that it was in line with the principles outlined in the EU Treaty, applying the COVID Temporary Framework by analogy, as it is well-targeted to fix serious trouble in the economy. In this manner, the Commission found that this action was in line with TFEU, in respective as (i) the payment was reasonable for a subordinated loan instrument, growing over time to encourage early repayment; (ii) the loan was given before 31 December 2020, (iii) the payment of the loan was below two-thirds of the Air France-KLM Group pay bill; (iv) the full duration of the loan was 6 years; and (v) Air France-KLM Group was not in hardship on or before 31 December 2019.

What conditions did the EU Commission apply to the French State guarantee?

Concerning the French State guarantee, the Commission’s assessment supposed that this measure was in line with the requirements of the Temporary Framework, in particular: (i) the guarantee compensation was in line with conditions under the Temporary Framework, increasing over time to promote early reimbursement; (ii) the guarantee was given before 31 December 2020; (iii) the loan approved by the guarantee was below the boundaries of the Temporary Framework; (iv) the greatest duration of the guarantee was 6 years and did not shield more than 90% of the underlying loans; and (v) the Air France-KLM Group was not in ordeal on or before 31 December 2019.

How did the EU Commission evaluate the Dutch State guarantee?

For the Dutch State guarantee, the Commission’s examination concluded that this action was in line with the prerequisites of the Temporary Framework, in respective: (i) the guarantee premium was in line with requirements under the Temporary Framework, growing over time to promote early reimbursement; (ii) the guarantee was given before 31 December 2020; (iii) the loan approved by the guarantee was below the limitations of the Temporary Framework; (iv) the maximum period of the guarantee was 6 years and did not shield more than 90% of the underlying loans; and (v) Air France-KLM Group was not in problem on or before 31 December 2019.

What were the terms of the Dutch State loan for Air France-KLM?

To the Dutch State loan, the Commission uncovered that this measure was in line with the Temporary Framework, in particular: (i) the payment was in line with the conditions under the Temporary Framework, increasing over the period to encourage early repayment; (ii) the loan was given before 31 December 2020, (iii) the quantity of the loan was below the limitations of the Temporary Framework; (iv) the maximum period of the loan was 5.5 years; and (v) Air France-KLM Group was not in tribulation on or before 31 December 2019.

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Simona Mazzeo is a journalist at Brussels Morning News. She is covering European Parliament, European Council, European Commission & Italy News. She is a law graduate and lawyer residing in Agropoli, has carved out a multifaceted career dedicated to justice and social advocacy. She actively serves as a delegated councilor for the Equal Opportunities Committee of the Bar Association of Vallo della Lucania, championing fair and equal representation within the legal system. Recognized for her expertise and empathy, Simona is qualified for registration in the list of Special Curators of minors in civil and criminal matters at the Court of Vallo della Lucania, ensuring the rights and interests of vulnerable children are protected throughout legal proceedings. Beyond her legal practice, Simona demonstrates a strong commitment to social causes. She is a founding member of the Free Lawyer Movement, a non-profit organization dedicated to providing legal assistance to those who cannot afford it. Additionally, she leverages her knowledge and passion for social justice as a non-professional journalist, contributing insightful and informative pieces on relevant legal and societal issues. Through her diverse endeavors, Simona Mazzeo exemplifies dedication to legal excellence, social responsibility, and a fervent belief in equal access to justice for all.