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June 8, 2020 | International, Aerospace, Naval, Land, C4ISR, Security

France Plans Billions of Euros to Rescue Aerospace Industry

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The French government will present a plan worth billions of euros to rescue its beleaguered aerospace industry, protect key suppliers from Chinese interests and may bring forward some defense orders, the transport minister said.

The aid package to be presented Tuesday is aimed at European jet manufacturer Airbus SE, engine maker Safran SA, defense group Thales SA, and hundreds of French suppliers that have seen their businesses dry up during the coronavirus pandemic. The plan will be worth as much as 10 billion euros ($11.3 billion), Les Echos reported Monday, although it's not clear what will be included in the total.

“We will invest several billions over a rather long period,” French Transport Minister Jean-Baptiste Djebbari said on LCI television Sunday. “The state will be here, the European Union will be present.”

The package will aim to kickstart air transport, relaunch manufacturing, and develop less-polluting “hybrid planes” toward 2027 and “carbon neutral” aircraft by 2035, the minister said. In exchange, the industry will have to create or relocate as many jobs as it can in Europe, he said.

However, the minister said the industry will probably have to cut jobs. With airlines grounding their fleets worldwide because of the health crisis, Airbus faces a 40% drop in its activity over at least two years, he said.

Airlines around the world are struggling to survive, with European giants Deutsche Lufthansa AG and Air France-KLM getting state bailouts and carriers desperate to salvage business from what is normally the busy summer. The French government has extended loans and guarantees worth 7 billion euros to Air France-KLM, tying the funds to a reduction in carbon emissions and services on its domestic routes.

The rescue will include the creation of several funds to consolidate the industry and to prevent key suppliers from being acquired by foreign investors, Djebbari said. Chinese companies are making “offers” to small and medium-sized companies with “critical skills” that are currently weakened by the crisis, he said.

Many of the companies that have been hardest hit are small and medium-sized. While they have limited access to commercial bank funding, some are considered strategic because they are also defense suppliers.

Read More: Macron Is Set to Unveil Rescue Package for French Aerospace

Many European nations will probably agree to reopen air travel in the so-called Schengen area from June 15 assuming that the coronavirus crisis continue to recede, Djebbari added. The number of Air France's flights may rise from 5% of its usual level to 15% from June 15, and to 40% in mid-August, he said.

https://www.bloomberg.com/news/articles/2020-06-07/france-plans-billions-of-euros-to-rescue-aerospace-industry

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