French Government Announces €15 billion Package for Dwindling Aviation Sector

On Tuesday, June 9, the French government announced a massive €15 billion package to uplift the country’s struggling aerospace sector.  This includes the €7 billion aid it announced earlier for Air France last month.

The coronavirus has spared no airline in its destructive path. Air France-KLM reported a €1.8 billion first-quarter loss while—Toulouse based—Airbus remained deprived of orders last month; an unlikely outcome after bagging the most aircraft orders last year.

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Bruno Le Maire

Under these circumstances, the French government was left with no choice but to step in. French Finance Minister, Bruno Le Maire, said that the government wants to “save” its struggling aeronautics industry while remaining competitive.

He added that 100 000 direct and indirect jobs would have dissolved, had the state not intervened:

We are declaring a state of emergency to save our aeronautics industry so that it can be more competitive and more decarbonized by producing the green plane of tomorrow… If we hadn’t intervened right away, a third of the jobs in the sector would have disappeared.

The €15 billion aid package includes help for SMEs and mid-sized aerospace companies. The investment fund will begin from €300 million but will have the potential to grow to €1 billion. The French state, Airbus, Safran, and Thales and Dassault will all contribute to the fund—comprising of both equity and debt.

The French state has further set aside €300 million for the “robotization and digitization” of industrial processes.

The A320 Successor

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©Mark Harkin

Maire reiterated the French government’s commitment to a clean and eco-friendly future. In pursuit of which, the state has allotted €1.5 billion for the research and development of a carbon-neutral aircraft by 2035.

This new aircraft will serve as the successor to the A320 and use biofuel as the primary source of energy. Ideally, the French state is aiming for “zero-emissions” by moving onto clean hydrogen fuel by 2035.

Some observers have critiqued the French government’s ambitious set of goals. They say the new plan is “aimed more at preserving aerospace jobs than helping the sector adjust to the reduced demand for aircraft.”

For now, however, the government is fixated on maintaining the appalling number of jobs at stake; that include the 35 000 positions dedicated to RND.

International Air Transport Association (IATA) predicted yesterday that global aviation industry losses will amount to $84 billion this year. Not a bright prospect for commercial aviation, to say the least. It said, however — for the European market — the industry can make a comeback if it avoids difficult quarantine measure and carefully regulates state aid.

If the French government pays heed to the guidelines outlined by IATA, it can play a crucial role in stabilizing its stumbling aviation sector.

Let us know what you think of the announcement in the comments below!

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