French Government, EU Close in on Rescue Plan for Air France

(Bloomberg) -- French Finance Minister Bruno Le Maire said the government and the European Commission are nearing a deal for the recapitalization of Air France that could be finalized in the coming days.

“The negotiation was long and difficult and isn’t entirely finished,” Le Maire said Monday on France Info radio. The accord will be fair and protective for Air France, while guaranteeing the country’s interests and competition rules, he said.

The package still needs final approval from the Commission and the struggling carrier’s board of directors, the minister said.

Air France-KLM shares rose as much as 3.1% in early Paris trading.

France and the Netherlands, which own a combined 28% stake in Air France-KLM, have been in talks for months on follow-on funding after granting the carrier 10.4 billion euros ($12.3 billion) in direct loans and state-backed guarantees last year. The airline partnership, which had net debt of 11 billion euros at the end of last year, has said it’s planning to raise equity and quasi-equity.

Le Maire declined to comment on specific details of the plan, saying only that it contains remedies “that are required to maintain fair competition between Air France and other companies.” The plan isn’t about closing routes or cutting jobs, he said.

France has sought to soften Commission demands for measures aimed at boosting competition, including the surrender of coveted landing rights at Paris-Orly and Amsterdam Schiphol airports. The Netherlands has also pledged aid.

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