The ecotax would be “irresponsible and catastrophic” for the CEO of Air France-KLM

Air France-KLM must “do a lot more” to reduce costs in the face of the persistent air transport crisis due to the new coronavirus, says Ben Smith, CEO of the Franco-Dutch group, in an interview published Monday by L’Opinion .

“We knew, before the pandemic, that we had to transform the group to make it stronger,” says Ben Smith. “The plan we announced in November 2019 is still relevant, but the crisis is forcing us to accelerate it. We need to do a lot more to reduce our costs. ” “We are making all the savings possible within the group and in the companies, it is essential to succeed in the months to come”, he adds, indicating that “today, the rule is that Air France-KLM only operates profitable flights ”.

The ecotax, “irresponsible and catastrophic”

The eco-tax project on air transport proposed by the citizens’ convention “would be irresponsible and catastrophic for our group,” said the CEO of the Franco-Dutch group, in an interview published Monday by L’Opinion.

“It would be irresponsible and catastrophic for our group,” he said.

Emmanuel Macron had indicated during the restitution of the Citizens’ Convention that almost all of the proposals would be implemented by the government. But the eco-tax project is now debated within the government, as airlines are plunged into the most serious crisis in their history

The aid will make it possible to “last for less than 12 months”

“If we look at the last few weeks, it is clear that the rebound in traffic will be slower than expected. When we negotiated state aid in the spring, we announced that we would not return to the 2019 level before 2024. This is why we will have to continue to adapt, ”explained Mr. Smith.

“In the spring, KLM obtained aid of 3.4 billion euros from the Dutch state (including 2.4 billion from guarantees). For Air France, it is 7 billion, including 4 billion guaranteed loan. These supports allow us to last less than 12 months ”, he continued.

“We are discussing with our shareholders how to strengthen our balance sheet beyond this period. One, three or five billion euros? It is too early to quantify the amount of a possible recapitalization ”, he added, specifying that this question would be“ decided before the next general assembly ”which is usually held during the second quarter.

As of June 30, the group had 14.2 billion in cash or lines of credit. Its capital is held by the French and Dutch States (14.3 and 14%), the American companies Delta and Chinese China Eastern to the tune of 8.8% each, the American investment companies Causeway capital manage (6.9% ) and Donald Smith & Co (5.2%) and employees (3.7%), the rest being free float (38%) and self-checking 0.3%).

Air France-KLM management has initiated a plan to “rebuild” the group after the Covid-19 crisis which will involve the elimination of 7,580 jobs at Air France by the end of 2022 and up to 5,000 at KLM .

Regarding the principle of an eco-contribution on air transport demanded by the Citizens’ Convention, Mr. Smith considers that it “would be irresponsible and catastrophic” for his group.

This proposal, the cost of which is estimated at 4.2 billion euros for the sector, is strongly criticized, both by all of its players and by the Minister for Transport Jean-Baptiste Djebbari. It must be the subject of a debate within the framework of a bill discussed at the beginning of next year.

(with AFP)