Air France-KLM has announced a plan of measures designed to strengthen
its balance sheet and reposition “the group on a sustainable financial
trajectory”.
The group will increase its capital by up to €1 billion
through the private placement of new shares and convert an existing €3 billion loan
from the French state into a perpetual hybrid bonds instrument.
This capital increase will be launched without preferential
subscription rights but with a priority period for the shareholders, allowing
existing shareholders to not be diluted.
The French state has said it will take part in the placement
but will keep its stake below 30 per cent of the share capital and voting
rights; China Eastern Airlines will also participate while keeping its
stake below 10 per cent.
Neither the Dutch State, which holds a 14 per cent stake, nor
Delta Airlines, which holds 8.8 per cent, will subscribe to the capital
increase, the latter due to the current framework of the CARES act in place in
the United States.
The conversion of the direct French state loan granted in May 2020 will allow the group to improve its equity by
€3 billion under IFRS accounting standards with no cash impact.
The group is considering additional measures to further strengthen the balance sheet
with several steps to be taken before the
2022 annual general meeting, as the group’s net equity will remain negative
after this first step. The Dutch government is continuing discussions with the
European Commission regarding potential capital-strengthening measures for KLM.
“These first recapitalisation measures are an important
milestone for our Group in this exceptionally challenging period,” said Air
France-KLM Group CEO, Benjamin Smith. “They will provide Air France-KLM with
greater stability to move forward when recovery starts, as large-scale
vaccination progresses around the world and borders reopen.”