Air France announced on Tuesday that it would receive a new French government bailout worth € 4 billion ($ 4.7 billion) to help the beleaguered airline cope with growing debts as a third wave of pandemic foreclosure in Europe prolongs the fall of air travel on the continent.
This support comes on top of the 10.4 billion euros ($ 12.3 billion) in loans and guarantees that Air France and its partner, the Dutch company KLM, received from the French and Dutch governments last year. .
Air France-KLM chief executive Benjamin Smith, citing an “exceptionally difficult time,” said the funds would “provide Air France-KLM with greater stability to move forward when the recovery begins, as large-scale vaccination is advancing around the world and borders will reopen. . “
Bruno Le Maire, France’s finance minister, said on Tuesday that the new aid takes the form of a state-backed recapitalization, which involves converting € 3 billion in loans the government gave last year to the airline in bonds without maturity, as well as in euros. 1 billion in new capital through the issuance of new shares.
The French government is the airline’s largest shareholder, with 14.3%. The deal could allow the government to increase its stake to 30%, Le Maire and Air France said, by buying some of the new shares. China Eastern Airlines, also a major shareholder, will also participate, Air France said.
Air France-KLM lost two-thirds of its customers last year and its debt nearly doubled to € 11 billion. He expects an operating loss of 1.3 billion euros in the first quarter.
As vaccinations accelerate in the United States, air travel has started to recover, fueling a return in ticket sales. Delta Air Lines has announced that it will add more passengers and start selling middle seats for flights from May 1.
In contrast, the vaccine’s deployment in Europe failed and variants of the virus gained traction, resulting in further travel restrictions. This has left major flagship airlines, including Air France-KLM, Lufthansa of Germany and Alitalia of Italy, struggling.
The French government recently reduced its economic growth forecast for 2021 to 5%, from 6%.
Air France’s board of directors approved the deal on Tuesday after the French government and European regulators agreed on terms.
The Dutch government is in separate talks with European regulators over converting a billion-euro loan to KLM into hybrid debt in exchange for slot concessions at Schiphol Airport in Amsterdam.
Air France employs tens of thousands of workers in France and is considered too big to fail. Still, Le Maire said the aid was not a “blank check,” adding that the company would have to “push for competitiveness” in return for the support and continue to reduce its carbon emissions.
To comply with European competition rules, Air France was forced to cede 18 slots per day, representing nine round trips, to companies competing at Orly, Paris’ second airport after Charles de Gaulle.
Credit Suisse said on Tuesday it would replace its investment bank chief and chief risk and compliance officer after losses related to its involvement with Archegos Capital Management, the collapsed hedge fund, totaling nearly $ 5 billion. dollars.
The Zurich-based bank is in turmoil after a series of disasters that have damaged its reputation and are likely to diminish its global influence. Credit Suisse also serves as a warning about the risks that may lurk in the financial system, as bankers and investors try to earn returns when interest rates are at their lowest and stock values are already foamy. .
Credit Suisse detailed the financial impact of its transactions with Archegos for the first time on Tuesday, saying it would report a loss for the first quarter of 900 million Swiss francs after recording a charge of 4.4 billion francs, or $ 4.7 billion, related to coverage. funds. The losses were greater than some estimates.
Brian Chin, Managing Director of Credit Suisse Investment Bank, will leave on April 30. Lara Warner, chief risk and compliance officer, will resign immediately, the bank said.
Credit Suisse board members will forgo their bonuses for 2020 and 2021, the bank said. Credit Suisse will also cancel its intention to buy back its own shares, a way of driving up the share price. But the bank, seeking to dispel any questions about its overall health, said its capital was still at levels deemed acceptable.
Credit Suisse shares fell more than 2% in Zurich early on Tuesday. They have lost a quarter of their value since the beginning of March.
Thomas Gottstein, Managing Director of Credit Suisse since last year, said the bank would hire outside experts to investigate what led to the ‘unacceptable’ loss of Archegos as well as the bank’s involvement with Greensill Capital, which collapsed last month.
Credit Suisse’s asset management unit oversaw $ 10 billion in funds that Greensill pooled based on the funding he provided to companies, many of which had low credit ratings.
“Serious lessons will be learned,” Gottstein said.
Starbucks has announced plans to phase out all single-use cups from its South Korean stores by 2025, the chain’s first such initiative, which seeks to reduce its carbon footprint.
In a statement on Monday, Starbucks said it plans to introduce a “cup circularity program” at some stores starting this summer, in which customers would pay a deposit for reusable cups that would be refunded when the containers would be returned and scanned at contactless kiosks. The arrangement would gradually be extended to cafes across the country over the next four years.
“Starbucks Coffee Korea is a leader in corporate sustainability globally, and we are excited to use the lessons of this initiative to drive meaningful change in our stores and inform future innovations at regionally and globally, ”Sara Trilling, president of Starbucks Asia Pacific, said in the statement.
South Korea has tried in recent years to reduce disposable waste in cafes, banning the use of plastic cups for restaurant patrons in 2018. Legislation introduced last year would force fast food and coffee chains to charge refundable deposits for disposable cups to encourage returns and recycling. Last year, the Environment Ministry announced plans to reduce the country’s plastic waste by one-fifth by 2025.
The increased use of plastic packaging and containers amid the coronavirus pandemic has been a setback for initiatives to reduce single-use plastic waste. In March 2020, Starbucks and other chains said they would no longer offer drinks in washable mugs or customer-owned mugs to prevent the spread of the virus.