PARIS (Reuters) – Air France-KLM AIRF.PA is discussing its intention to raise more capital with its major shareholders, the French and Dutch governments, CEO Ben Smith said in an interview.
The airline group, which signaled a likely share issue in May with its first package of state-guaranteed loans now totaling 10.4 billion euros ($ 12.3 billion), will have to “continue to s’ adapt ”to a new air travel crisis, Smith told Daily. The Opinion.
Air France has announced 7,500 job cuts in response to the coronavirus crisis, while KLM plans to cut its pre-crisis workforce by 33,000 by around 20% by next year.
“The support from the French and Dutch governments is enough to keep us going for less than 12 months,” Smith said.
“We are discussing with our shareholders how to strengthen our balance sheet beyond this period.”
Hopes of a resumption of travel to Europe have collapsed with late-summer traffic, amid a resurgence in rates of COVID-19 infection, various travel restrictions and quarantine regimes doomed by industry as disproportionate.
The sector is also facing new regulatory pressures and green taxes as the European Union and Member States strive to reduce greenhouse gas emissions. Austria announced new levies in June as well as a minimum tariff of 40 euros.
The envisaged proposals for a sharp increase in French air taxes are “irresponsible and catastrophic” and would result in thousands of additional job cuts, Smith said.
French President Emmanuel Macron had pledged to present tax proposals, among others, developed by a citizens’ panel on the climate, although ministers can now oppose them.
Instead, policymakers should consider introducing minimum prices for tickets, Smith said, in comments that could anger low-cost competitors who would be most affected.
“The idea that we can fly from Europe to Australia in 24 hours remains extraordinary. On the other hand, is Paris-Dublin for 12 euros reasonable? Smith said, citing Austria’s minimum tariff.
“It’s an interesting debate that we should collectively have.”
(1 USD = 0.8480 euros)