BAILOUTS provided to Air France-KLM by the French and Dutch governments will keep the airline flying less than a year, its CEO Benjamin Smith said today, while evoking the possibility of injecting new capital.

In an interview with the French daily l’Opinion, Smith also warned that calls for airlines to contribute more to fight climate change could be catastrophic for their survival, which is already under threat due to the coronavirus pandemic.

Airlines faced steep drops in revenue when countries imposed lockdowns earlier this year to stem the spread of the coronavirus, with some going under.

A number of countries stepped in with support, including France, which provided €7 billion (RM33 billion) to Air France and the Netherlands, which received a €3.4 billion package.

“This support will permit us to hold on less than 12 months,” said Smith.

Meanwhile, air traffic is picking up slowly as many northern hemisphere countries fear a second wave of infections.

“If we base it upon the past few weeks, it is clear that the recovery in traffic will be slower than expected,” according to Smith, who said when the bailout was put together, the airline was expecting a return to 2019 levels only in 2024.

Smith said discussions are under way with shareholders on shoring up the airline group, and steps will be taken before the next regular annual meeting in the second quarter of next year.

“One, three or five billion euros? It is too early to put a figure on a possible recapitalisation,” he said.

The airline group had €14.2 billion in cash or available under credit lines.

Major shareholders include the French government with a 14.3% stake, the Dutch government at 14%, as well as Delta and China Eastern airlines, which each hold an 8% stake.

Governments are coming under pressure to tie airline bailouts to environmental commitments.

One proposal that has come from a citizen’s convention attended by President Emmanuel Macron would cost airlines an estimated €4.2 billion. 

Smith said the imposition of environmental charges on the industry would be “irresponsible and catastrophic” for Air France-KLM. – AFP, September 21, 2020.