Air France-KLM raised €2.26 billion by selling new shares to shore up its balance sheet and repay a chunk of the state aid that helped the carrier survive the Covid-19 crisis.
The proceeds of the rights issue will be used to reimburse about €1.7 billion of subordinate bonds issued last year and held by the French government, and to further reduce debt, the Franco-Dutch airline said Tuesday.
French shipping giant CMA CGM SA invested in the transaction to take a 9 per cent stake in the carrier as part of an air-cargo alliance announced last month. It now has a seat on the board.
“This operation, which is part of a broader strategy to transform and streamline our group, will allow us to emerge with a stronger balance sheet and increased strategic flexibility,“ chief executive Ben Smith said in the statement.
The transaction brings Air France-KLM closer to completing a targeted €4 billion capital increase as it seeks to pay down borrowings in line with European Union requirements on state funding, which currently bar the airline from participating in the consolidation of an industry roiled by the pandemic.
Air France-KLM has been linked to one of two bidding groups for Italia Trasporto Aereo, the successor to failed Italian carrier Alitalia. Smith has cautioned the carrier has been burned before on investments in the predecessor to the Italian airline.
Air France-KLM said last month it was in talks with Apollo Global Management Inc for a €500 million capital injection into an Air France unit affiliate that owns a pool of spare jetliner engines used in its maintenance operations.
Like other European airlines, the group is laying on capacity as the removal of Covid travel curbs result in a surge in bookings. At the same time, carriers remain wary of bottlenecks at major airports and prospects beyond the summer as inflationary pressures add to costs and weigh on consumer spending.
France participated in the rights issue and kept its shareholding at 28.6 per cent, the airline said. The Dutch government retained its 9.3 per cent stake.
China Eastern Airlines and Delta Air Lines saw their stakes in the Franco-Dutch carrier lowered to 4.7 per cent and 2.9 per cent as they committed to participate in the rights issue on a cash neutral basis, selling some of their subscription rights to CMA CGM. — Bloomberg
