Air France-KLM has welcomed a fresh decision by the European Commission confirming the legality of state financial support given in response to the Covid-19 pandemic, after its originally approval decision was successfully challenged on appeal. The Commission had originally backed E7b and E3.4b worth of French and Dutch government support packages in May and June 2020, respectively, adjudging both to be compatible with state aid laws – including the rules temporarily relaxed during the pandemic. However judges of the European Union’s General Court last December annulled a decision approving French state aid to Air France, after ruling that other companies of its parent group should have been considered as beneficiaries. It similarly annulled the Dutch support scheme to KLM in February this year for the same reason. Both decisions followed challenges brought by Ryanair and its Malta Air subsidiary. The Commission, as well as Air France-KLM, appealed that decision – a ruling on which is still to come. European competition commissioner Margrethe Vestager today says: ”Following the General Court judgements annulling the initial decisions, the Commission has found that E10.4b in liquidity support to the Air France-KLM Group complies with state aid rules. The Air France-KLM Group required the state guarantee and the state loan to obtain vital liquidity to face the difficult coronavirus period and they were granted in line with the Temporary Framework, irrespective of the definition of the beneficiary.”<br/>
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A surprise return to profit has propelled Vietnam Airlines JSC to become the world’s best performing airline stock this year, shrugging off the risk of bankruptcy as the company’s post-pandemic recovery finally picks up momentum. The state-owned carrier has rallied 179% so far in 2024, lifted by a rebound in travel demand. That steered the company to post a bumper first quarter profit after more than four years of consecutive losses. It’s an impressive turnaround for an airline that until recently had been at risk of insolvency, and in danger of being de-listed from the Ho Chi Minh Stock Exchange. It’s now outperforming regional rivals such as Singapore Airlines Ltd., which has risen 7.8% this year, and Air China Ltd., down 3.7%. Vietnam Airlines is expecting to record “all-time high revenue and turnaround profit” this year, according to a July 4 note from PYN Fund Management, one of the company’s few institutional investors. It was highlighted as PYN Elite’s stock of the month for June by analyst Huyen Tran, with a forecast of growth in passengers and revenue this year. Airlines across Southeast Asia are seeing a resurgence in demand as key tourist markets slowly return. Visitors from China, the largest source of visitors for Vietnam before the pandemic, have streamed back in the first six months of this year, more than tripling from a year earlier. As the biggest local carrier operating routes to the mainland, Vietnam Airlines is poised to benefit. The company remains wary of challenges to its business: In a statement last month, Vietnam Airlines Chairman Dang Ngoc Hoa cited “macro-economic uncertainties” facing the industry, adding that its “primary goal” is to reduce losses while balancing revenue and spending. Even so, the airline has ambitions to expand this year by adding routes to Southeast Asia and Europe. It’s also adjusting the frequency of its flights and increasing capacity along key routes to “capitalize on demand.” <br/>