Air France-KLM receive help from French Government
Air France-KLM alliance has received support from French and Dutch government to deal with the coronavirus crisis that could have a lasting impact on airline business. The French government will offer €3 billion in loans to the airline and €4 billion in state-guaranteed funds. The Netherlands will offer KLM €2 billion in loans and €4 billion in state-guaranteed funds.
The company Chief Executive Ben Smith said that the help from the governments is much appreciated. However, he mentioned that the airline will have to go through cost-cutting measures to deal with the pandemic led crisis.
Smith added, “This financing will give us the opportunity to rebuild. Faced with the upheaval the world is going through, we are going to have to rethink our model immediately.”
Airlines suspended flights to many destinations after coronavirus cases started piling up across Europe and United States. While airlines stand to gain from the low oil prices once they resume operations, it is yet to be ascertained how much they will suffer in terms of passenger traffic.
Aviation sector and tourism are among the worst hit due to coronavirus. It will be difficult to estimate when the tourist activity will get back to normal. It could turn out to be the worst year for airlines in many decades.
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