The French and Dutch governments have agreed to provide at least €9 billion in state aid to Air France-KLM.
A loan and guarantee totalling €7 billion have been pledged by the French state, with its Dutch counterpart agreeing to an aid package of between €2 billion and €4 billion.
The loans were announced a day after it emerged Lufthansa has appealed for €10 billion in state aid from the German government.
Air France-KLM said talks with the governments over the “major impact” of the Covid-19 crisis had taken place over several weeks.
The French government has agreed to guarantee up to 90% of a €4 billion loan by six banks as well as provide a direct loan of €3 billion.
The loan and guarantee remain subject to approval by the European Commission.
Once these have been finalised, Air France-KLM will consider increasing its equity capital, with the French government indicating “it might participate” and increase its 14% stake in the carrier.
In a separate statement, KLM thanked the Dutch government for pledging €2 billion to €4 billion in state aid.
It noted: “The Dutch government and KLM are still discussing the details of the aid package and the conditions attached.
“The aid package will come in the form of state guarantees and loans amounting to between €2 billion and €4 billion.”
KLM president and chief executive Pieter Elbers expressed “deep gratitude and appreciation for this strong support from the Dutch government on behalf of all KLM’s employees”.
He said: “Air France and KLM are currently weathering a storm of unparalleled magnitude. The Dutch government has responded with aid on an equally unprecedented scale.”
Air France-KLM said in a statement that the financial support would enable the carrier “to meet its obligations by continuing its transformation”.
“The transformation plan, which will be finalised in the coming months, will include economic, financial and environmental commitments.
“It will involve a review of Air France’s activities to adapt them to the new market reality brought about by the crisis, and will have to strengthen its financial situation.”
Air France-KLM Group chief executive Benjamin Smith said: “This aid, along with the group’s action plan, will enable us to withstand this crisis and foresee the future of Air France-KLM.”
The airline’s chairman Anne-Marie Couderc said: “I would like to thank the French state and our banking partners for this aid, which will enable the Air France-KLM Group to overcome this unprecedented crisis.”
