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France announces multi-billion aid package for aviation industry

The money includes direct government investment, subsidies, loans and loan guarantees.

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The French aid package will benefit Airbus (Francois Mori/AP)

The French aid package will benefit Airbus (Francois Mori/AP)

The French aid package will benefit Airbus (Francois Mori/AP)

France’s government is pumping 15 billion euro (£13.3 billion) into the pandemic-battered aerospace industry, including plane manufacturer Airbus and national airline Air France.

In exchange for aid, companies will be required to invest more and faster in electric, hydrogen or other lower-emission aircraft, as France aims to make its aviation industry the “cleanest in the world”.

The deal was negotiated with unions, who said they would stay vigilant about job guarantees. Some environmental activists expressed scepticism about green ambitions for such a high-emission industry.

“We will do everything to support this French industry that is so critical for our sovereignty, our jobs and our economy,” finance minister Bruno Le Maire said.

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France’s government has announced billions in aid for its virus-battered aerospace industry (AP/Christophe Ena, FILE)

France’s government has announced billions in aid for its virus-battered aerospace industry (AP/Christophe Ena, FILE)

AP

France’s government has announced billions in aid for its virus-battered aerospace industry (AP/Christophe Ena, FILE)

As travel restrictions grounded most flights to keep coronavirus contained, the fallout cascaded across the industry, from airlines to airports to engine makers, maintenance contracts and spare parts suppliers. Airlines around the world have filed for bankruptcy or sought bailouts to survive the near-shutdown in their activity, and officials predict the industry will take years to recover.

The French aid money includes direct government investment, subsidies, loans and loan guarantees. It also includes a special fund jointly financed by the government, Airbus and other big manufacturers to support small suppliers.

It includes 7 billion euro (£6.24 billion) in loans and loan guarantees that the government had already promised to Air France, whose planes were almost entirely grounded by the virus.

And like a similar multibillion-euro plan to save the French car industry announced last month, the aviation bailout requires more investment in clean energy – and puts pressure on manufacturers to avoid redundancies.

It will aim at modernising the production chain and preserving European aviation know-how, Mr Le Maire said.

“We must save our aeronautical industry. We must avoid any decline in the coming months with regard to the American giant Boeing and the Chinese giant Comac,” he said. “We won’t let the world aeronautical market be shared between China and the United States. France and Europe will retain their position.”

The government will help Air France buy Airbus planes, and pledged to order 600 million euro (£534 million) worth of refuelling tankers, drones and helicopters from Airbus’s defence arm. In addition to dominating the global passenger aircraft market alongside Boeing, Airbus is also a major supplier of military aircraft to European governments.

The rescue plan includes investment in developing the successor to Airbus’s widely used mid-range A320, a new hybrid or hydrogen regional plane, and a new light helicopter.

PA Media