France announces €15bn plan to shore up Airbus and Air France

Aerospace rescue package calls for investment in electric and hydrogen planes

France has unveiled a €15bn (£13bn) rescue plan for its aerospace industry, in an attempt to preserve hundreds of thousands of jobs and shore up the manufacturer Airbus and the national carrier, Air France.

Ministers said companies would have to ramp up investment in alternative technologies such as electric and hydrogen planes as part of the bailout.

The plan includes €7bn already announced for Air France, whose fleet was almost entirely grounded during the pandemic, and whose partner KLM is being backed by the Dutch government.

The finance minister, Bruno Le Maire, said the government would do “everything to support this French industry that is so critical for our sovereignty, our jobs and our economy”, as he launched the plan alongside the transport, defence and environment ministers.

Le Maire said the deal would prevent decline and help keep Airbus competing with its US rival Boeing, as well as China’s Comac, which has threatened the global duopoly.

The bailout will help push through Air France orders of new Airbus planes, while it also includes new defence spending by the government on Airbus military products.

Unions in the UK called for a similar bailout to protect up to 1.2 million British jobs. Steve Turner, the Unite assistant general secretary for manufacturing, said: “The French government is absolutely right to act to protect French aerospace and aviation skills and jobs while also delivering on climate change commitments. This is precisely the sort of intervention we quickly need to see from the UK government to preserve jobs.”

Cathay Pacific has become the latest airline to receive a state bailout to survive the coronavirus pandemic, with the Hong Kong government taking a stake in the carrier as part of a HK$40bn (£4bn) rescue plan.

Cathay was one of the first airlines to suffer a collapse in traffic as coronavirus emerged in China, where most of its flights operate. A new government-controlled company will take a 6% stake as part of a share offering, and it will also loan the carrier a further HK$7.8bn.

About 90% of staff at the embattled carrier have taken unpaid leave while 600 head office jobs were cut last month, after Cathay grounded the majority of flights earlier in the year. Its business was already hit by falling passenger numbers in the wake of the pro-democracy protests last year.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Hong Kong’s financial secretary, Paul Chan, said the government did not intend to be a long-term shareholder in Cathay and would not get involved in the operations and management of the airline.

According to figures released on Tuesday by the global aviation body, Iata, bailouts have contributed to airline debts that have risen by $120bn during the crisis to a total $550bn (£432bn).

Iata warned that airlines were heading for a collective loss of $84.3bn in 2020, the biggest in the sector’s history.

Contributor

Gwyn Topham Transport correspondent

The GuardianTramp

Related Content

Article image
Airbus agrees deal on bribery investigations in UK, US and France
Aerospace group likely to pay large fines to end inquiries by SFO and other authorities

Jasper Jolly and agencies

28, Jan, 2020 @8:15 AM

Article image
Airbus unveils new jet at Paris airshow and $15bn worth of orders
The A321XLR is a long-haul version of the A321neo – a rival to Boeing’s grounded 737 Max

Gwyn Topham Transport correspondent

17, Jun, 2019 @4:22 PM

Article image
Future of Air France 'in doubt' after boss quits amid strike action
French economy minister says state will not rescue company if strikes over pay make airline uncompetitive

Angela Monaghan

06, May, 2018 @4:28 PM

Article image
France fumes as Dutch government takes stake in Air France-KLM
Buying near-13% share is acting like unfriendly corporate raider, says French government

Rob Davies and agencies

27, Feb, 2019 @2:36 PM

Article image
Airbus to pay record £3bn in fines for 'endemic' corruption
UK court sanctions fines after firm admits using agents across world to bribe officials to land high-value contracts

David Pegg and Rob Evans

31, Jan, 2020 @5:33 PM

Article image
Airbus reports loss of €1bn after Covid, and could shed 15,000 jobs
Aircraft maker says ‘pandemic continues to impact lives, economies and societies’

Jillian Ambrose

18, Feb, 2021 @2:31 PM

Article image
Travel firms drop £2bn in value after France added to UK Covid quarantine list
The British Airways owner, IAG, and struggling tourism group Tui among the fallers

Mark Sweney

14, Aug, 2020 @8:32 AM

Article image
Two senior Airbus executives charged with insider dealing in France
Chief operating officer John Leahy and former HR director Erik Pillet face charges over exercise of share options in the weeks prior to release of bad news relating to A380 programme

Tim Webb

10, Dec, 2010 @7:30 PM

Article image
Airbus tells suppliers to gear up for record production on bestselling jets
Aerospace firm predicts strong but belated Covid recovery amid move to raise A320 output to 64 per month by 2023

Jasper Jolly

27, May, 2021 @8:56 AM

Article image
Final minutes of Air France flight AF447 to be examined as trial opens
Air France and Airbus are being tried on charges of involuntary manslaughter after 228 people died in the 2009 crash

Angelique Chrisafis in Paris

10, Oct, 2022 @4:00 AM