European governments have been reversed. Since the privatization of aircraft began two decades ago, the coronavirus crisis has changed drastically as countries across the continent have accumulated billions of euros in state aid to save their national flag carriers.
There is Paris Increase Air France-KLM has a stake of about 30 percent, Berlin has a 20 percent stake in Lufthansa, and Rome has a 100 percent stake in Alitalia, with more than বেশি 20 billion invested in strategically important companies that have failed.
But a backlash against state support is growing as rivals fear an unequal playing field and rap competition in their careers. While governments need to protect investment as needed to save airlines from facing unprecedented short-term risks in order to survive, critics say public money could help the proposed airlines avoid the tough decisions needed for long-term growth.
The fiercest critic is Rainier boss Michael O’Leary, who has filed a lawsuit in a European Court to examine state aid rules, arguing that aid for flag carriers is discriminatory and undermines the EU’s single market for air travel.
The Irish chief executive said companies like Air France would never be able to repay the government, but would “be able to suppress subsidies and competition for the next decade.”
“We, the EasyJet, [BA owner] The IAG and others will have to compete with this state-sponsored, crack cocaine junkies. “
Rayana has lost five lawsuits so far, but O’Leary told the Financial Times that she thinks there is a “very strong possibility” that her “low-cost airline” will overturn the appeal.
The epidemic also highlighted differences between continental Europeans, where state-aid rules were relaxed to help organizations survive the crisis and the United States and the United Kingdom.
The British and Americans have stopped accepting equity stocks despite billions in loans and other financial support, with some arguing that their airlines would become stronger because they were forced to make aggressive cuts on the crisis.
“When we get out of this, companies that don’t have a government on their register will be relentlessly relentless, constantly improving, humble and sticky,” Virgin Atlantic chief executive Shy Weiss told Steve.
“I think once we are in a safe port, the payback will be. We have just learned to work [other airlines receiving support]His airline was denied a rescue package by the UK government last year and had to cash in person.
Everlasting Bullish O’Leary agrees, insisting on government intervention, airlines like his create a long-term opportunity to “become more efficient and competitive in order to survive against a long-term state aid.”
But this support also underscores the importance of airlines as significant employers and strategic assets that do not allow governments to fail during crises.
The companies not only welcomed the support to deal with the passenger crash, but also reduced their targets to get cheaper to foreign competitors as share prices fell.
“The crisis in Europe has revived old concerns,” Martin Vial, a French state-owned equity investment firm, told FT, adding that the threat posed by US or Chinese parties to domestic companies on the continent is a potential threat.
He added, “Governments need to make sure that some of the largest business hunters in these countries, private or public, do not fall prey to it because obviously the crisis is going to open up opportunities,” he added.
Vial, who sits on the board of Air France-KLM, also stressed that airlines are strategically important to France “as they are to other European countries.”
“You have to consider that in the last one year, about 15 airlines have received state capital support. Air France-KLM is no exception.
Analysts agree that there is a strong argument in favor of viewing flag carriers as strategic.
“Let’s say some French mid-sized company wants to build a new production center in Bratislava. Would it be possible to make this tree in Bratislava, if it could not rely on having a continuous air service there? “Bernstein analyst Daniel Royeska says.
He believes that many airlines would have left without state support. “We have seen money injections in general to help states maintain services and help these agencies survive. If the government did not do that, we would be bankrupt.
In Italy, the government has taken up the whole flag in 2020 with plans to relaunch it through a new agency called ITA and nationalized its flagship Alitalia.
While acknowledging that he was “extremely sorry” for losing the old brand, Italian Prime Minister Mario Draghi hoped that the ITA would eventually be able to survive without public support.
“Someone my age has traveled with Alitalia almost his entire life, it’s like being part of a family. . . He’s an expensive, but still a family, ”he told a news conference in April.
But before considering any departure plans for Rome, it will first have to fight Brussels with state aid conditions.
Italy’s previous government had set aside 3 3 billion for the new national airline, but the European Commission is demanding a big reduction in airport slots – one of the highest complaints from rivals – for handling and ground service sales and job cuts. Green light plan.
Italian politicians are urging any reduction to be complied with The limited hit Air France-KLM took on Paris Orly.
In France and Germany, full state ownership is not on the agenda.
Paris remains adamant that it will scale its equity investment over time and not nationalize Air France-KLM in profits, while the German government says the airline will “make a small profit when it exists and sell its stake” to “fit again”.
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Air France-KLM is expected to need more recapitalization measures from more Dutch states, with Lufthansa shareholders approving an increase in future capital to repay some of the government’s money this month.
“We were probably not in the same world 20 or 30 years ago. We are not in a state of mind where state aid is given without expectation of economic performance in return, ”Vial pointed out. Air France made that progress Before the crisis when the state already had 14 percent shareholder.
However, restoring the health of the airlines may take longer than expected.
Bernstein’s Royceca warned that succession carriers would create signs of crisis year after year as they struggle to delete and restructure to adapt to a smaller market, “the price will rise less,” he said.
Carriers face obstacles in exchange for state assistance, including meeting new environmental standards.
In France, ministers are backing legislation to cancel flights if there is an alternative to the two-hour 30-minute alternative train. Vial argues that it will ultimately be seen as an asset as consumers demand green travel options.
However, such interventions have raised deep concerns. Aviation pilot Andrew Charlton, who led the privatization of Australian carrier Qantas in the 1990s, argued that it was difficult for governments to maintain a boundary between fair competition and their own interests while maintaining airport position.
“What is the analysis that has called for governments and countries to fly flags around the world? The concern is that you will be connected to the world, but really – no one is flying to Paris or Berlin? “