Air France-KLM has secured €7 billion in state aid from the French government, and is pursuing a further €2-€4 billion in support from the Dutch authorities.
The payout was signed off by the EU Commission on Monday (4 May), which raised no competition or legal concerns, but will be subject to strict environmental commitments.
France’s economic minister Bruno Le Maire told France’s Inter radio that Air France should become "the most environmentally respectful airline", the BBC reports.
Measures will include Air France cutting its domestic route network in half. The cash is split €3 billion in loans and €4 billion in funds guaranteed by the state.
Margrethe Vestager, the commission’s executive vice-president, said the French government cash would provide the group "urgent liquidity" to ensure Air France can "withstand" the impact of the coronavirus crisis, and continue to provide jobs and connectivity, noting "essential role" the carrier has played in global repatriation efforts and transport of medical equipment.
Vestager also confirmed the French government’s plans to insist on "certain green policy choices" with respect of Air France.
The commission added France had demonstrated all other potential means to obtain liquidity via commercial markets "had already been explored and exhausted".
The deal, though, Reuters reports, has raised tensions between unions in France and the Netherlands, with the Dutch contingent calling for the relationship between the two carriers – both of which are approximately 14% state-owned – to be relaxed.
It is also likely to further spark the ire of Ryanair chief executive Michael O’Leary, who has branded EU-wide state aid offerings "doping" and "illegal", warning they risk undermining competition across Europe’s aviation sector.
Meanwhile, Air France has become the latest carrier to require all passengers to wear face masks while onboard. The rules will come into force on 11 May. It follows new French government guidance on Covid-19, which has seen Eurostar insist on passengers and staff wearing masks as of Monday.