The Franco-Dutch transport group and the Marseille shipowner will have a joint offer in air freight. And CMA CGM will rise to a maximum of 9% of the capital of Air France-KLM.
A surprise guest soon in the capital of Air France-KLM. Tuesday before the opening of the Stock Exchange, the Franco-Dutch air carrier and the Marseille shipowner CMA CGM announced in a joint press release that they had concluded a ” major long-term strategic partnership in air freight. “With this agreement, ” CMA CGM will become a reference shareholder of Air France KLM. »
Clearly, the world’s third largest container ship operator will be able to take up to 9% of the air transport group. If the positions remained as they were, this would then make it the fourth shareholder of the Franco-Dutch operator behind the French State (28.6%), the company China Eastern airlines (9.6%), the State Dutch (9.3%). But ahead of the American company Delta airlines (5.8%)
But be careful, it’s not done. This equity investment will take place during the capital increase that Air France-KLM has been wishing to carry out for several months. The group led by Ben Smith repeats over and over again that it wants to strengthen its equity by four billion euros, in particular via a capital increase.
Need to strengthen equity
However, to achieve this, it needs new shareholders. The French and Dutch states have indicated that they will participate in the operation. But, as far as France is concerned, which has already strengthened its stake in Air France-KLM last year on the occasion of a previous capital increase of one billion, there is no question of becoming a shareholder more important: exceeding 30% would force it to launch a takeover bid on the group, which is not at all the intention of the government.
The companies China Eastern and Delta did not indicate their intentions. But in a context where China tends to curl up on itself to fight against the Covid, it is doubtful that China Eastern will participate in the operation.
CMA CGM’s desire to become a shareholder of Air France-KLM is therefore excellent news for the air transport group. Because the Franco-Dutch actor absolutely needs to strengthen its equity. This operation would allow him to quickly settle his PGE (loan guaranteed by the State) on which he still has to repay 3.5 billion out of four billion.
This operation is essential: as long as it has not repaid this loan, it will not be able to participate in the consolidation of the air transport sector. More specifically, the European Commission prohibits a company from taking 10% of another company’s capital until it has reimbursed 75% of its PGE.
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Stock market shooting window
However, it is today that airlines are for sale for very affordable prices. And Air France-KLM, handicapped by its PGE, cannot currently participate in the competition, unlike Lufthansa which repaid its state loans in the fall of 2021. Quoted in the press release, the CEO of CMA CGM, Rodolphe Saadé , was not mistaken: Through our participation in its capital, Air France-KLM will be able to count on us to support it in its future developments.”he says.
But the potential arrival of CMA CGM will not solve all the problems. To carry out its capital increase, Air France-KLM needs to find the right market window. Twice already, the group has come close to launching its operation and had to give up at the last moment: at the end of November when Omicron sowed panic and in February when the war broke out in Ukraine.
To prevent current shareholders from being too diluted, the Air France-KLM share should be around 4.50 euros. But it was only worth 3.96 euros today before the opening of the stock market. So we will have to wait a bit.
Major player in air freight
Beyond this financial dimension, this partnership includes a major operational component on freight. ” Air France-KLM and CMA CGM will jointly and exclusively operate the entire capacity of the all-cargo aircraft of their respective companies, i.e. 10 all-cargo aircraft in operation, and 12 others on order with the two groups “say the two giants in their joint press release. To this must be added the marketing of the holds of the 160 Air France-KLM aircraft. With this partnership signed for at least ten years, the two players will together become a leading player in air freight, which has become a very profitable and growing business since the start of the pandemic. Ben Smith, CEO of Air France-KLM, is not mistaken: ” This is a key step that will significantly strengthen and develop the Group’s position in the air cargo sector. “, he underlines.
This movement confirms the ambitions of CMA CGM. Taking advantage of stratospheric profits made over the past 18 months, the shipowner has continued to strengthen itself to become a global player in the international transport of goods. In particular, he bought a terminal in the port of Los Angeles for nearly two billion euros and took 51% of the capital of Colis Privé, the French specialist in e-commerce deliveries to individuals.
By joining forces with Air France-KLM in air freight, it is taking a new step forward and becoming a true competitor of the world leader in container ships, Maersk, which is also diversifying in all directions.
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