Air France-KLM : looking for partners and fresh cash

Air France is currently very active on the financial partnership scene. The reason for this is twofold: to forge new industrial partnerships and to reduce its debt, particularly with respect to the State, with the possibility of buying out ITA in the future.

CMA CGM takes a 9% stake in Air France-KLM

If the COVID crisis has taught us one thing, it is that air cargo has a future, even though many airlines have been cutting back for years. But things have changed since then, the airlines have understood that they still have a role to play in cargo and the maritime freight operators have understood how indispensable air transport is to them.

It is in this context that CMA CGM and Air France announced last week a partnershipthat will see CMA CGM acquire a 9% stake in Air France.

CMA CGM is the world’s third largest freight operator and has added to its maritime capacities an air branch composed of four A330-200Fs which it operates through Air Belgium. Enough to deal with an emergency, not enough to really exist in the sector.

Between these aircraft, the Air France-KLM cargo fleet, the cargo capacity of other Air France-KLM aircraft and CMA CGM container carriers, there are indeed more synergies to be developed.

By taking a 9% stake in Air France-KLM, CMA CGM will become its fourth largest shareholder after the French and Dutch governments and China Eastern.

At this stage, it is not known whether CMA CGM will enter the capital of Air France by buying back shares orby taking advantage of the future capital increase,which seems the most likely for reasons we will see later.

Air France KLM in talks with Apollo to raise funds

Other information that leaked last week, Air France would be in discussion with the investment fund Apollo to raise $500M which would be injected into its capital.

Why? Air France-KLM legally needs to recapitalize very quickly, and the fact that the group has had a better start to the year than its European competitors will not change anything.

In addition Air France-KLM received about 11 billion euros in loans guaranteed by the French and Dutch governments during the COVID crisis and it is urgent to pay them back. To pay them back one has to raise money and to raise money one has to present a clean balance sheet structure.

But why would they want to pay it off so quickly when the current schedule calls for it to be done by 2025? Because Air France-KLM wants to buy ITA Airways from the Italian government and although it may have the means, it does not have the right to do so in the current state of affairs.

ITA takeover in the background

The Italian government has indeed put the airline built on the ruins of Alitalia up for sale. Two potential buyers have expressed their interest: Lufthansa and ….Air France-KLM.

To our great surprise, as the Franco-Dutch group is not allowed to invest in the capital of another airline, it was difficult to see how it could position itself.

Why ? Like Lufthansa, Air France-KLM received state aid during the COVID under the condition set by the European authorities to avoid any distortion of competition, not to invest in another company in the industry until these grants were repaid. Lufthansa has since repaid its aid after raising money on the markets, Air France-KLM did not seem to have the capacity to do so, hence the logical conclusion that the Italian airline was about to fall into German hands.

It is therefore easy to understand why Air France-KLM is in a hurry to pay off its “COVID debts”. And since, unlike Lufthansa, its finances are not presentable enough to go directly to the markets,it must first find partners to improve its balance sheet.

For the record, Air France-KLM received about 11 billion euros to survive during the COVID, which it must repay, while its current market capitalization is only 2.8 billion euros.

If CMA CGM’s contribution was in the form of a capital increase, added to Apollo’s 500 million, this would effectively change the situation and Air France-KLM would be more presentable for raising funds.

The road is long but possible towards the acquisition of ITA

Air France-KLM is thereforein a race against time: first to increase its equity, then to raise money, then to pay off its debts before being able to buy ITA… and being able to finance the takeover. At present, the announcement of the Italian government’s choice should be made at the beginning of the summer, but the operation should not be concluded before the end of 2022. It is to be hoped that it is at this date and not before that the eventual buyer will have to show his credentials to the European authorities.


Air France-KLM is making every effort to be in a position to acquire ITA Airways. It has a good chance to pay back its COVID debts before the fateful date… as long as the Italian government does not prefer Lufthansa.

Image :B777 Air FrancedeLukas Wunderlich via Shutterstock

Bertrand Duperrin
Bertrand Duperrin
Compulsive traveler, present in the French #avgeek community since the late 2000s and passionate about (long) travel since his youth, Bertrand Duperrin co-founded Travel Guys with Olivier Delestre in March 2015.

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