French Economy Set To Shrink 20% Q2, Air France Reduces Flights By 40%

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Nancy Heslin   Forbes Monaco

French Economy Set To Shrink 20% Q2, Air France Reduces Flights By 40%

On Wednesday, France’s official statistics agency, INSEE, announced the country’s economy is set to contract 20% in the second quarter from the previous three months.

The virus-struck French economy officially fell into recession after shrinking 5.8% in the first quarter.

INSEE estimates that the euro zone’s second-biggest economic activity was 21% below normal levels, the result of a 7-week lockdown and closure of non-essential businesses from March 17.

Activity plummeted 33% in early May but with the reopening of businesses on May 11 consumer spending was just 6% below normal levels.

INSEE also projects France’s economy could contract 8% for 2020 if activity does not bounce back to pre-crisis levels by July.

French prime minister Edouard Philippe will address the country on Thursday, May 28, to announce the second phase of deconfinement measures, which is expected to include the reopening of restaurants and extending the 100 kilometer distance from home rule.

Meanwhile Air France-KLM CEO Benjamin Smith said the airline would be reducing national flight service by 40% by 2021. Flight destinations within two and a half hours of a train station will be closed, with the exception of the Roissy-Charles-De-Gaulle hub.

Air France is receiving a €7 billion state loan by on the condition it improves profitability and its environmental impact, as well as restructure its network in France.

The French-Dutch carrier suffered a net loss of €1.8 billion in the first quarter. of 2020 There was no confirmation as to whether service to Nice-Côte d’Azur airport will be part of the destination axing.

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Nancy Heslin   Forbes Monaco

Nancy Heslin is an established journalist and lifestyle writer. She has been the Editor-in-Chief of Forbes Monaco magazine (bimonthly in English) , since the magazine's 2nd issue . Launched in November 2018, Forbes Monaco is part of the Forbes family, with its 7 million readers and 71 million monthly website visitors worldwide.