France builds 20 billion euro fund to help recapitalise ‘national champions’

Aircraft of Air France Airlines are seen on the tarmac at Paris Charles de Gaulle airport in Roissy-en-France.

The French government has set aside 20 billion euros ($21.7 billion) to help inject capital into big companies struggling to survive the coronavirus crisis, Finance Minister Bruno Le Maire said on Friday.

Le Maire has repeatedly pledged to help France’s corporate champions get through the coronavirus crisis by taking stakes in them or even going as far as nationalisation if necessary.

“We’ve decided to put credit on the fund, to put 20 billion euros on the special fund to support to the capital of companies that need it, whether public or private,” Le Maire said on Europe 1 radio.

The funds are earmarked in a package of crisis measures that Le Maire more than doubled on Thursday to 100 billion euros and which is set to go to parliament next Wednesday for approval.

First on the list of companies that may need state funds is Air France KLM (AIRF.PA), which said on Thursday it expected the French and Dutch states to help meet its cash needs with air travel at a standstill.

“As regards Air France, we are ready for when the time comes, without a doubt soon, to support Air France and make sure that this French industrial champion … recovers quickly,” Le Maire said.

Sources have told us that Air France-KLM is in talks with banks to receive up to 6 billion euros in loans guaranteed by the French and Dutch governments, a sum which the junior transport minister has described as “not unrealistic”.

Meanwhile, other companies whose business activity has ground to a halt are seeking to tap bank credit first rather than rushing to the state for new capital.

Renault (RENA.PA) Chairman Jean-Dominique Senard said on Friday that the carmaker, in which the French state has a 15% stake, could seek bank loans worth 4-5 billion euros.

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