The French government has agreed a further €4bn rescue package for airline Air France KLM, which involves the issue of €1bn in new shares.

The agreement means the French government’s stake in the airline will rise from 14% to almost 30%. The Dutch state, which also has a 14% stake in the company, is not buying new shares, which means the Dutch stake in the company will be reduced to some 9.3% – for a period at least.

‘The Dutch state will further investigate, together with the relevant stakeholders,  the conditions under which a KLM recapitalisation could take place and a potential intervention of the Dutch state in such recapitalization,’ Dutch finance minister Wopke Hoekstra and his French counterpart Bruno Le Maire said in a joint statement.

Last year the French government put €7bn into Air France and the Dutch state €3.4bn into KLM. That support was in the form of loans and bank guarantees.

The European Commission has approved the new round of support on condition that Air France hands back 18 slots at Paris Orly airport. That will reduce flights by some 6,500 a year. The airline has also been banned from paying bonuses in the coming period.

The company booked a loss of over €7bn last year as the coronavirus crisis paralysed international travel and passenger numbers plummeted.