(BFM Bourse) – After announcing that it was going to put more than 2 billion euros on the table for the recapitalization approved by EDF this Friday, the State shareholder is preparing to come to the bedside of Air France – KLM, whose finances have also been more than weakened in the past two years.
The year 2022 will be one of major maneuvers for the State shareholder, which comes to the rescue of EDF and is also preparing to bail out Air France-KLM, two French “flagships” in the grip of great financial difficulties. Friday, the government announced that the State would contribute up to 2.1 billion euros to the capital increase of 2.5 billion decided by EDF, of which it is a shareholder with nearly 84%.
“The objective is to allow EDF to restore its accounts, to be able to reinvest in the future and to be able to carry out the investments announced by the President of the Republic in Belfort under the best conditions”, justified the Minister of the Economy Bruno Le Maire, in reference to the nuclear recovery plan unveiled by Emmanuel Macron.
And this is probably only a first step. This capital increase of 2.5 billion, “obviously, that is not enough”, acknowledged Bruno Le Maire on Friday in view of the colossal investments that EDF must make in the coming years, both in nuclear and renewable energies. Today’s operation “does not close the way to any option for the future”, insisted the Minister.
Air France needs cash again
At Bercy, we are also preparing to come to the rescue of Air France-KLM, another historic French flagship, already struggling before the health crisis and whose situation has worsened dramatically with the pandemic. The airline reduced its losses last year, but said it was ready to launch a new recapitalization operation of up to 4 billion euros to consolidate its accounts.
Among other solutions, a capital increase is envisaged, to which the State, shareholder at 28.6%, will contribute if necessary. “We are awaiting Air France’s decision. (…) we will always be alongside Air France, as we have been since the start of this crisis,” said Bruno Le Maire on Friday morning on RTL.
The French and Dutch states could participate in this operation “in proportion” to their current participations, and “through partial compensation” for the aid they have granted to the group, according to Air France-KLM. “The subject is on the table, we must wait for the stock market to rise to a more optimal level” for such an operation, explains a source familiar with the matter.
A year ago, in April 2021, the State had already converted 3 billion euros of loans into quasi-equity and participated in a capital increase of 1 billion euros, just as in Germany the State had flew to the rescue of the airline Lufthansa, recapitalizing it in 2020.
“Significant” costs
For EDF, as for Air France-KLM, aid from the French state is a prerequisite for any financial recovery. “There is a real economic strategy behind all of this, it is the strategy of supporting French industrial flagships”, insisted Bruno Le Maire, also recalling state support for Renault via a guaranteed loan during the crisis. “Companies must be able to rebuild their equity to a level that allows them to refinance on the markets”, that is to say with private investors, we explain at Bercy.
If the amounts involved are substantial, the question of financing does not arise immediately for the State, which has given itself budgetary leeway since 2020 according to the finance laws. For 2022, the government has earmarked up to €7 billion for capital operations, via the dedicated trust account, according to budget documents published last fall.
The State Shareholding Agency (APE), which manages public shareholdings in large companies, is also preparing for the future executive who will emerge from the presidential election an evolution of its doctrine to take into account the difficulties of his wallet. The Court of Auditors, however, expressed concern in a report published this month about the “costs” which “will weigh” on the EPA due to “the recapitalization needs linked to the health crisis”. “The delayed effects of the crisis for the participations managed by the APE could be significant,” she warned.
(with AFP)
Quentin Soubranne – ©2022 BFM Bourse
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