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Bloomberg
Air France-KLM plans to sell about 2.26 billion euros ($2.4 billion) of 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 euros of subordinate bonds issued in April last year and held by the French government, and to further reduce debt, the Franco-Dutch airline said. The subscription period is set from May 27 to June 9.
“We want to be in a position to seize any opportunity in a changing aviation sector and
to be able to accelerate our
environmental commitments,†Chief Executive Officer Ben Smith said in a statement.
The transaction will bring Air France-KLM closer to completing a targeted 4 billion-euro 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 arlines Alitalia SpA. Both submitted proposals before the deadline.
One group is led by US-based Certares Management LLC, a travel-focused investment firm that may also have support from Air France-KLM investor Delta Air Lines Inc. A rival bid from Mediterranean Shipping Company SA is backed by German national carrier Deutsche Lufthansa AG.
Air France-KLM said it was in talks with Apollo Global Management Inc for a 500 million-euro capital injection into an Air France unit affiliate that owns a pool of spare jetliner engines used in its maintenance operations.
The share-sale plan and improved earnings following the lifting of pandemic restrictions will both help to strengthen the balance sheet, enabling Air-France-KLM to further repay French aid in coming quarters, it said.