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Franco-Dutch airline holding company Air France-KLM and Air France have secured €7bn in funding to maintain financial stability amid the coronavirus (Covid-19) pandemic.

The support mechanism was obtained following several weeks of discussions between the parties.

Some of the various components forming the support mechanism include a French state-supported loan of €4bn, which will be granted by a syndicate of six banks to Air France-KLM and Air France.

The French state is guaranteeing this loan up to 90%, with a maturity of 12 months and two consecutive one-year extension options exercisable by Air France-KLM.

In addition to this, the funding includes a direct shareholder’s loan of €3bn to Air France-KLM.

To mature in four years, the loan has two consecutive one-year extension options exercisable by Air France-KLM.

Air France-KLM Group CEO Benjamin Smith said: “On behalf of our Group and its employees, I would like to thank the French state and our banking partners for their support in ensuring the future of the Air France-KLM Group.

“This aid, along with the group’s action plan, will enable us to withstand this crisis and foresee the future of Air France-KLM with ambition and determination. We are a strong Group and we are united in the face of this crisis.

“I would like to once again salute the exceptional commitment of our employees for their dedication to the repatriation of our fellow citizens, the transport of medical equipment, and maintaining the essential links with territories.”

Subject to approval by the European Commission, the aid will enable Air France-KLM Group in helping Air France to continue and survive amid the pandemic.

Last week, the International Air Transport Association (IATA) called on governments to act on measures, including direct financial support, loans and tax relief to European carriers to preserve European air services.