THE EUROPEAN Commission (EC) has authorised the next tranche of cash for the recapitalisation of Air France, but has expressed reservations about the speed with which the national flag carrier is restructuring.

The first Fr10 billion ($2 billion) chunk of the Fr20 billion being given to the airline by the French Government has been paid. Payment of the second and third tranches, of Fr5 billion each, was made conditional on Air France meeting tough restructuring requirements laid out by the EC in its 1994 ruling approving the money.

While Brussels originally described Air France's restructuring proposals as "generally satisfactory", it now appears to be questioning the strength of the plan. The EC says that the airline "...has not yet put in place all of the economy measures needed". It adds that the "long-term viability" of the airline will be threatened if the measures are not fully carried out.

During 1994, Air France reduced losses by slightly more than half, to Fr2.7 billion. It says that productivity has improved by 7%, and that it intends to raise this by a further 12% in 1995.

Source: Flight International