Air France KLM raises funds, ready to buy ITA

We wrote last week that Air France-KLM was very active on the financial scene in order to reduce its debt and, above all, torepay the state aidreceived to get through the COVID crisis.

This is how CMA GM became a shareholder of the group and contacts were made with the Apollo management fund to raise $500M.

Capital increase for Air France-KLM

But this does not seem to be enough and the Franco-Dutch group is currently issuing 2.3 billion euros worth of new shares to increase its capital.

These funds will be used to reimburse state aid and the balance to reduce the business’s debt.

Nevertheless, we wonder if whether this will be enough: the group has received 11 billion in aid, so it is not sufficient… unless only a part of this aid is concerned by the prohibition to invest in another airline until they are repaid.

Because that’s the real point.

The acquisition of ITA: priority objective

There was no hurry for the reimbursement of the state aid. The proof is that the schedule had even been reviewed and extended. What changed the situation is, as we have already explained, the sale of ITA by the Italian state.

Air France-KLM is logically interested and is a priori a natural contender, despite not always easy relations with its Italian neighbor, but was prevented by these aids, aids that Lufthansa, another contender, has already repaid.

Indebted but with 11 billion euros in cash, Air France-KLM will have the opportunity to go back on the offensive and participate in the consolidation of the market.

Then it is still necessary that its offer is retained, which is another subject.

No change in Air France-KLM shareholding

However, this capital increase will not change the group’s shareholding structure.

France and the Netherlands will participate in order to maintain their level of participation, Delta and China Eastern will also reinvest the proceeds of the sale of their shares to CMA CGM, which will become a shareholder of the group.

Conclusion

The sale of ITA by the Italian government will have had the merit of forcing Air France-KLM to clean up its finances faster than expected. Even if ITA escapes, the operation will still have been salutary.

Image : AF and KLM aircrafts by Markus Mainka via Shutterstock

Bertrand Duperrin
Bertrand Duperrinhttp://www.duperrin.com
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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