What Air France-KLM will do to repay state aid
Air France-KLM, the French-Dutch airline, will increase the share capital by 2.2 billion euros to repay state aid. And it could submit an offer for Ita Airways within a consortium led by the Certares fund. All the details
The French-Dutch airline Air France-KLM announced today a capital increase of € 2.26 billion with the aim of strengthening its balance sheet and repaying part of the state aid received in France.
This is the second capital increase operation in a year for Air France-KLM, the second largest airline in Europe by turnover. Its largest shareholders are the French state (with 28.6 per cent), that of the Netherlands (with 9.3 per cent) and the airlines China Eastern (it is Chinese; with 9.6) and Delta Air. Lines (US; with 5.8).
THE RESUMPTION OF AIR TRAFFIC
Furthermore, the capital increase should serve to raise funds to reinvest in its activities, given the recovery of air passenger traffic in Europe. However, there are two unknowns that make the scenario for the sector uncertain: the increase in inflation, which reduces the purchasing power of consumers, and the war in Ukraine, which feeds a feeling of general insecurity. It is therefore possible that the resumption of flights mainly favors low-cost airlines .
HOW DO THE ACCOUNTS GO
The coronavirus pandemic, with its mobility restrictions, has cost Air France-KLM about 11 billion euros in two years, writes Le Monde . Despite the bailouts of the French and Dutch governments, the company has a debt of 7.7 billion.
AIR FRANCE-KLM DECLARATIONS AND OBJECTIVES
Air France-KLM chief executive Ben Smith said the deal was part of the airline's efforts to "strengthen our financial autonomy" and regain operational flexibility after state aid. "As the recovery continues and our economic performance picks up," he added, "we want to be able to seize any opportunity in an ever-changing aviation industry."
The company confirmed the target of reducing the ratio of net debt to EBITDA to 2-2.5 by 2023. Compared to the total proceeds of the shares, 1.7 billion euros will be used to repay the French aid granted under form of subordinated bonds in April 2021.
The sale of shares – explains MF-Milano Finanza – will bring Air France-KLM closer to achieving the objective for an overall capital strengthening of 4 billion.
THE OFFER OF CMA CGM
In recent days, the French shipping company CMA CGM has announced that it will acquire a stake of up to 9 percent of Air France-KLM, becoming the fourth largest shareholder. Conversely, the holdings of China Eastern and Delta Air Lines will decrease to 4.7 and 2.9 per cent respectively. Those of France and the Netherlands will remain unchanged.
AND ITA AIRWAYS?
The move by Air France-KLM – writes Reuters – comes as Italy is looking for bidders for ITA Airways, the airline that succeeded Alitalia: among these there could be a consortium led by the American fund Certares which also includes Air France-KLM .
INJECTION OF CAPITAL FROM APOLLO
Last week Air France-KLM unveiled a plan to raise 500 million euros through a capital injection by Apollo Global Management, a private equity firm, into a unit of the company that deals with engines of replacement. The funds will also be used to repay French aid.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/air-france-klm-vendita-azioni/ on Tue, 24 May 2022 13:44:36 +0000.