France

Renewed COVID-19 lockdowns are pushing Air France-KLM deeper into the red, the airline group warned on Thursday, as it chalked up a 7.1 billion euro ($8.5 billion) net loss for 2020 and postponed a key mid-term profitability goal, Reuters reported. The airline group expects to fly 40% of its pre-crisis capacity in January-March, as tougher travel curbs in France and beyond widen losses from the 407 million euros in negative earnings before interest, taxes, depreciation and amortization (EBITDA) recorded in the fourth quarter.
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France is optimistic that the European Commission will sign off within days on an innovative plan for helping companies through the post-pandemic recovery, according to a finance ministry official, Bloomberg News reported. The French government has proposed a program to partially guarantee billions of euros of so-called participatory loans to improve corporate balance sheets and encourage borrowing for investment. The scheme is intended to benefit companies with long-term prospects.

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L Catterton, the private equity firm backed by luxury French fashion house LVMH, is starting to pull ahead in the bidding for iconic German sandal maker Birkenstock, Bloomberg News reported. Birkenstock’s owners are currently focusing on negotiations with L Catterton as they prefer the investment firm’s track record buying and expanding family-backed consumer brands. They also see the potential to grow in Asia with L Catterton’s network in the region. L Catterton is competing with buyout firm CVC Capital Partners, which had approached Birkenstock earlier.
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France and the Netherlands appear to be readying for a clash with the European Commission over a fresh aid package to debt-laden carrier Air France-KLM, Bloomberg News reported. Dutch Finance Minister Wopke Hoekstra warned lawmakers on Wednesday he couldn’t rule out the possibility that the airline will be asked by European regulators to give up airport slots in exchange for approval for more state aid.

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As France lived through its worst economic slump since World War II, business failures slid to the lowest in 33 years, Bloomberg News reported. The number of bankruptcies and firms seeking protection from creditors or entering receivership fell 38% in 2020, as government aid in the face of the coronavirus pandemic kept French companies afloat, according to figures gathered by enterprise-data firm Altares. That may foreshadow a wave of defaults in 2021 and 2022, said Thierry Millon, its head of research.

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The European Union and the incoming administration of U.S. President-elect Joe Biden should suspend a trade dispute to give themselves time to find common ground, France’s foreign minister said, Reuters reported. “The issue that’s poisoning everyone is that of the price escalation and taxes on steel, digital technology, Airbus and more particularly our wine sector,” Jean-Yves Le Drian told Le Journal du Dimanche in an interview. He said he hoped the sides could find a way to settle the dispute. “It may take time, but in the meantime, we can always order a moratorium,” he added.

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France on Thursday took a tough line against any takeover of retailer Carrefour by a foreign company, dealing a major blow to a near $20 billion bid approach by Canada’s Alimentation Couche-Tard, Reuters reported. French Finance Minister Bruno Le Maire told Reuters that the government wanted to preserve the country’s food security and sovereignty. “Having Carrefour being bought by a foreign company would be a major difficulty for all of us,” Le Maire said in an interview at the Reuters Next conference.

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French carmaker Renault in December drew down an extra 1 billion of its 5 billion euro ($6.1 billion) government-guaranteed loan arranged due to the COVID-19 crisis, Deputy Chief Executive Clotilde Delbos told an online presentation on Thursday, Reuters reported. Renault has now tapped 4 billion euros of the loan, Delbos said, adding that the company felt it was wise to use the means at its disposal. Read more.

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Bonds issued by French supermarket group Carrefour SA took a pounding on Wednesday as a takeover approach from Canada’s Alimentation Couche-Tard Inc. sparked concerns that a deal would swell the combined company’s debt burden, Bloomberg News reported. A 1 billion euro ($1.2 billion) note maturing in 2027 was indicated 1.1 cents lower at 115.4 cents, marking the biggest one-day price drop since issuance last March, based on data compiled by Bloomberg. It’s the worst-performing bond in the euro high-grade market Wednesday, followed by other bonds issued by the French grocer.

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Rising corporate debt and the prospect of further Covid-19 lockdowns pose a systemic risk to France’s financial system that may rise in the coming months, according to the country’s central bank, Bloomberg News reported. Debts of non-financial companies are now the greatest vulnerability in the system, the Bank of France said in its semi-annual review of financial risks. While the second lockdown starting in November didn’t hit some companies as severely as the first, a slow economic recovery will make it tough for some to pay off debts built up since the start of the crisis.

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