France promises to do everything it can to keep Europe in the aerospace race
France has pledged nearly $ 17 billion to support Airbus, Air France and the country‘s entire aviation industry, saying Europe cannot afford to lag behind China and the United States in the global aerospace race..
This financial stimulus package will create 100,000 new jobs over the next six months, the French economy minister said on Tuesday. Bruno Le Maire. It will also help French companies keep up with their international competitors such as America’s Boeing and China‘s COMAC..
«We will not allow the global aviation market to be split between China and the United States. France and Europe will be there too», – stated Le Maire.
The € 15 billion ($ 16.9 billion) package includes € 7 billion ($ 7.9 billion) to support Air France, which was previously announced by the government. Le Maire said aviation companies would be allowed to delay loan payments for up to one year, helping to save jobs. aircraft manufacturers Airbus (EADSF) and Dassault (DASTF), and aerospace component suppliers Safran (SAFRF) and Thalès.
Around € 1.5 billion ($ 1.7 billion) will be allocated to research and development to begin production of a carbon-neutral aircraft in 2035. «France can become a European country where the aircraft of the future will be developed and produced», – added Le Maire.
The coronavirus crisis has hit global airlines hardest and is now spreading to companies that make parts and other essential components for their aircraft. During the pandemic, thanks to strict quarantine measures and isolation policies, consumer demand for flights has collapsed, and it is not expected to recover fully in the next few years after all restrictions are lifted..
According to the forecast of the International Air Transport Association (IATA), the global aviation industry will lose $ 84 billion in 2020 and another $ 15 billion in 2021. IATA said demand for air travel and travel will rise sharply next year, but passenger traffic will still be almost 30% lower than in 2019.
All over Europe, governments are trying to support their aviation companies. Air France (AFLYY) was granted assistance in April, while Lufthansa (DLAKF) finalized the terms of receiving aid from the German government in the amount of € 9 billion ($ 9.8 billion) in May.
US airlines also received about $ 50 billion in government aid.
Airbus is a key player in the European aviation industry. Based in France but with manufacturing facilities in Germany, Spain and the UK, the company is in a competitive war with Boeing to supply aircraft to airlines around the world..
In March, the company received a € 15bn ($ 16.9bn) line of credit to help it strengthen its position amid the pandemic in Europe. The French government also said it would postpone its military orders for Airbus refuellers and helicopters..
Airbus will also benefit from assistance provided by Air France, one of its largest customers..
«The plan announced by France is a thorough and correct response to the challenges», – CEO said Guillaume Faury in a Twitter post. «This will help us soften the shocks in the short term, while maintaining our ability to recover when the time comes. At Airbus, in the face of this crisis, we are doing everything we can to protect our business and industry.».
Boeing, which was experiencing serious problems due to the ban on the 737 MAX and before the pandemic, still does without financial assistance from the US government, was able to independently raise $ 25 billion by placing its own bonds..
Chinese COMAC, which has long been trying to break the Airbus-Boeing duopoly, is still lagging behind in the development of its narrow-body C919 aircraft, and it may be years before the company releases an airliner capable of challenging competitors..