France promises billions to keep Europe in the air race

France promises billions to keep Europe in the air race
The package will provide 100,000 jobs over the next six months, French Economy Minister Bruno Le Maire said on Tuesday. French companies will keep up with aircraft manufacturers such as American Boeing and Chinese COMAC.

“We will not allow the global aviation market to be divided between China and the United States. France and Europe will be there,” Le Maire said.

The 15 billion euro ($ 16.9 billion) package includes 7 billion euros ($ 7.9 billion) support for Air France that the government had announced earlier. Le Maire said airlines would be allowed to defer loan payments for up to a year, helping to save jobs for aircraft manufacturers Airbus (EADSF) and Dassault (DASTF) as well as aircraft component suppliers Saffron (SAFRF) and Thales.

Approximately 1.5 billion euros ($ 1.7 billion) will be allocated to research and development aimed at producing neutral carbon aircraft in 2035. “France could be a European country where tomorrow’s aircraft will be designed and manufactured,” he added. is Le Maire.

The coronavirus crisis has hit global airlines and is now spreading to companies that make the parts and systems that power their planes. Consumer demand for flights declined during the travel ban and closure pandemic, and is not expected to fully recover several years after the closure of prison systems.

The global aviation industry will lose $ 84 billion in 2020 and an additional $ 15 billion in 2021, according to the International Air Transport Association’s forecast on Tuesday. The industry group said demand for air cargo and travel will increase sharply next year, but passenger travel will still be nearly 30% less than in 2019.

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Governments across Europe are stepping up to help airlines. Air France (AFLYY) approval was granted in April, while Lufthansa (DLAKF) in May, it finalized the terms of the German government’s $ 9 billion ($ 9.8 billion) rescue package. Companies are pushed to make their business more environmentally friendly.
U.S. airlines have also benefited from government bailouts worth about $ 50 billion.

Global competition

Airbus is at the heart of the European aviation industry. Headquartered in France, but s manufacturing facilities in Germany, Spain and the UK, competes with Boeing to deliver aircraft to airlines around the world.

The company secured a 15 billion-euro ($ 16.9 billion) credit instrument in March to bolster its position after the pandemic spread across Europe. The French government announced on Tuesday that it would bring waiting for military orders to pay for tanks and helicopters by Airbus.

Airbus also benefits from the assistance provided to Air France, one of its largest customers.

“The plan announced by France is a solid and real response to the challenges,” CEO Guillaume Faury said on Twitter. “It will help us mitigate the blows in the short term, preserving our ability to recover when the time comes. At Airbus, despite this crisis, we are doing everything possible to protect our business and industry.”

Boeing (BA), which had already been felt since the grounding of the 737 MAX before the pandemic arrived, has so far avoided saving the U.S. government by raising $ 25 billion by offering bonds.

China’s COMAC is trying to break the duopoly enjoyed by Airbus and Boeing, but its single-pass C919 plane has lagged behind the plan, and it could be many years before the company produces an aircraft that can challenge rivals.

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– Hanna Ziady and Eoin McSweeney contributed to the reporting.

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