Tue | Jul 7, 2020

France announces US$17b in aid for aviation industry

Published:Wednesday | June 10, 2020 | 12:54 PM
In this May 14, 2020 file photo, French police stand guard in Terminal 2 of Charles de Gaulle international airport in Roissy, north of Paris.
In this May 14, 2020 file photo, French police stand guard in Terminal 2 of Charles de Gaulle international airport in Roissy, north of Paris.

France’s government is pumping €15 billion (US$16.9 billion) in rescue money into the pandemic-battered aerospace industry, in hopes of saving its hundreds of thousands of jobs and keeping plane maker Airbus and national airline Air France globally competitive.

In exchange for aid, companies will be required to invest more and faster in electric, hydrogen or other lower-emission aircraft, as France aims to make its aviation industry the “cleanest in the world”.

The deal was negotiated with unions, who said they would stay vigilant about job guarantees. Some environmental activists expressed scepticism about green ambitions for such a high-emission industry.

“We will do everything to support this French industry that is so critical for our sovereignty, our jobs and our economy,” Finance Minister Bruno Le Maire said, unveiling the plan alongside the ministers of transport, defence and environment – a sign of how important the aeronautic sector is in France.

The French aid money includes direct government investment, subsidies, loans and loan guarantees. It also includes a special fund jointly financed by the government, Airbus and other big manufacturers to support small suppliers.

It includes €7 billion in loans and loan guarantees that the government had already promised to Air France, whose planes were almost entirely grounded by the virus.

And like a similar multibillion-euro plan to save the French car industry announced last month, the aviation bailout requires more investment in clean energy – and puts pressure on manufacturers to avoid lay-offs.

It will aim at modernising the production chain and preserving European aviation know-how, Le Maire said.

“We must save our aeronautical industry. We must avoid any decline in the coming months with regard to the American giant Boeing and the Chinese giant Comac,” he said. “We won’t let the world aeronautical market be shared between China and the United States. France and Europe will retain their position.”


The government will help Air France buy Airbus planes, and pledged to order €600 million worth of refuelling tankers, drones and helicopters from Airbus’ defence arm. In addition to dominating the global passenger aircraft market alongside Boeing, Airbus is also a major supplier of military aircraft to European governments.

The rescue plan includes investment in developing the successor to Airbus’ widely used mid-range A320, a new hybrid or hydrogen regional plane, and a new light helicopter.

The government is also working with unions on a long-term, short-work scheme that would allow the industry to preserve jobs as it slowly ramps production back up.

As a result of the virus lockdown, Airbus said it is cutting production by 35 per cent to 40 per cent, and Boeing announced that it would cut 10 per cent of its 161,000-person workforce through attrition, early-out offers and lay-offs.

“The recovery will be long,” Le Maire warned. The government predicted it will be 2023 before the industry reaches pre-crisis levels.