More European airlines could be nationalized

In the wake of the sudden economic crisis brought on by Covid-19, Alitalia may prove to be only the tip of European airlines returning to state ownership to keep them flying.

Air France/KLM, which has laid off 80% of its staff and cut 90% of its operations is one of the candidates; French officials have said in recent days that “the state shareholder” would do what’s necessary to keep it alive. The French government already has a 14.3% share of the combined French/Dutch company. Some agreement between the two states would be need if there is to be a change in ownership, possibly even if France only moved to take over the French share.

Germany’s Condor Airlines, which survived the bankruptcy of its parent, Thomas Cook, might end up with German government ownership. A deal was arranged months ago for it to be sold to Poland’s LOT airline, but the current crisis has led to LOT asking Germany for financial concessions in the deal which German authorities have turned down, leaving Germany’s government as the only likely buyer.

Lufthansa, Germany’s flag carrier, is also flying close to the bone, and is considered unlikely to invest enough in its Brussels Airlines subsidiary to keep it out of bankruptcy and in the air, and the Belgian government, which considers the airline critical to its economy, is also considering the state takeover route.

While any of these actions could be intended as temporary measures before eventual re-privatization, it is unlikely that any of them, if they happen, would unwind quickly, because it could be years before the governments could find a deal that would let them at least break even.

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