By Laurence Frost and Arno Schuetze
PARIS/FRANKFURT (Reuters) - Air France-KLM (PA:AIRF) is moving towards a 10 billion euro (8.79 billion pounds) government-backed rescue deal, sources said, after France agreed to higher guarantees on loans designed to tide the airline group through the coronavirus crisis.
Paris is ready to vouch for 90% or more of the bank loans to Air France, rather than the 70% initially offered, two people with knowledge of the matter told Reuters. The increased guarantees were first reported by La Tribune on Wednesday.
Air France-KLM representatives and the French finance ministry declined to comment.
Major airlines including Germany's Lufthansa
Banks had been holding out for an improvement on the 70% French guarantees offered for about 4 billion euros in loans to Air France, to be accompanied by close to 2 billion euros in Dutch-backed lending to KLM, Reuters reported on April 3.
The entire package for the Franco-Dutch airline group as a whole now amounts to about 10 billion euros, two sources said.
In addition to the guaranteed bank loans, Air France is likely to draw on a government emergency fund, increasing its total support to about 8 billion euros, according to French media reports.
Group Chief Executive Ben Smith is preparing to accelerate a planned restructuring of the Air France short-haul network and the expansion of low-cost division Transavia, La Tribune also reported on Wednesday, leading to possible job cuts in France.