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“Some companies will not recover” from the Covid crisis, according to a specialist

Unable to repay its loans, Air France is recapitalized by the French State. The 2.26 billion euros loan granted to the company should be reconverted into equity.

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“Let’s face it”, the recapitalization of 2.26 billion euros of Air France-KLM aims to turn the page on Covid-19, confirms on Tuesday May 24 on franceinfo the economist specializing in air transport Loïc Tribot La Spière. Since 2020, “Air France’s cumulative net loss amounts to 11 billion euros”. According to him, there are “too many airlines” and “some will not rise” of the health crisis. “It’s the whole model that needs to be reviewed.”

franceinfo: With this recapitalization, Air France-KLM aims to get back on its feet?

Loic Tribot La Spiere: Of course, let’s face it. With the Covid and the confinements, air transport has experienced a serious crisis. Traffic fell and, before that, the companies were already in a difficult situation. Let’s not forget that the cumulative net loss of Air France amounts to 11 billion euros. Some of these companies will not recover. There are too many and the sky will have to restructure itself. It’s the whole aerial model that needs to be reviewed.

Is the price of plane tickets too low to reimburse the cost of an airline?

Yes. The profitability of the airlines was made before on the sale of tickets in first class and especially in business. Today, wealthy people and especially the business community are lacking. Many companies still prefer to telecommute and hold meetings by videoconference. The filling of the business has not returned to its normal rhythm. One of the keys would undoubtedly be to upgrade the first class. It could be on the agenda at Air France but we will have to act quickly.

If there is a capital increase, and therefore investments, does that mean that the airline sector continues to be a bet for the future?

This is the case for some. What is interesting in this recapitalization of Air France-KLM is the return to the capital of the shipowner CMA-CGM. This means that there could be a development of the freight activity and the constitution of one of the first long-freight in the world. It’s part of the future. That would mean that there will be an intensification of air freight and a rationalization with the naval world.

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