Air France-KLM will pocket 500 million euros with their engines

The airline is contributing the Apollo fund to one of its subsidiaries that owns spare engines. With this transaction, the Franco-Dutch group will repay part of its government loans.

Capital increase, issue of perpetual bonds and refinancing of assets in the amount of 500 million euros: Air France KLM, when presenting the results of the first quarter two weeks ago, described the toolbox for its provision to strengthen its own funds of 4 billion euros.

On Friday morning, before the stock exchange opened, the Franco-Dutch group announced that it would activate one of these devices. Specifically, she has entered into exclusive negotiations with the American investment fund Apollo. on the €500 million capital injection into an Air France operating subsidiary that owns a fleet of Air France spare engines dedicated to its design and maintenance activity. Clarifications via press release.

The carrier carefully states that there will be no social or operational consequences. “ There will be no change in the way spare engines are used, nor will there be any impact on Air France or Air France-KLM employee contracts. ‘ we read in the press release. A few years ago, the simple plan to outsource the maintenance activity caused great concern among the airline’s employees.

Intervention of CMA CGM

Not surprisingly, Air France KLM intends to use the 500 million that will flow into its coffers to repay the PGE (government-guaranteed loan) granted to Air France. He had already repaid 500 million of the four billion loan granted to him two years ago. With this additional share of 500 million, it owes the banks no more than three billion euros.

This week Air France KLM will have made great strides in paying off this loan. Two days ago, the group announced that CMA CGM would participate in the next capital increase. On this occasion, the Marseille shipowner takes over up to 9% of the Dutch airline. Air France KLM does not give a date for this capital increase. It will launch it as soon as market conditions allow.

It goes without saying: for Air France KLM, the fastest possible repayment of this loan is of crucial importance. Until he repays 75% of it, he cannot buy more than 10% from another airline. However, the consolidation of the sector is currently taking place, which offers airlines for sale at very affordable prices.

And Lufthansa, which repaid its state loans in autumn 2021, can position itself for acquisitions if Air France KLM is not entitled to do so. In cooperation with the Italian shipping company MSC, Lufthansa submitted an offer to take over ITA (formerly Alitalia), which is currently on the market. Air France KLM is currently unable to make an offer and is limited to offering the renewal of its commercial partnership with ITA.

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