Meeting urgently on Easter Monday, Air France-KLM’s board of directors approved, on Monday April 5, the conditions of the agreement between the French government and the European Commission for new financial aid from the State at Air France. To participate in the recapitalization of the company, Paris will open its wallet wide and provide a new boost.
A year ago, the government had already granted 7 billion euros to the airline in the form of two devices: a state guaranteed loan (PGE) of 4 billion euros and a state loan of 3 billion euros. According to the agreement reached with Brussels, this shareholder loan will be transformed into convertible bonds, financial instruments considered as quasi-equity.
In addition, up to 1 billion euros can be provided in cash in exchange for an increase in the capital of Air France. With these new provisions, the company will no longer have to repay, as it had committed, the aid of 3 billion euros in four years, but over a much longer period. This operation will be carried out on the occasion of a capital increase.
Just under 30%
As the Minister of the Economy, Bruno Le Maire, confirmed on Tuesday April 6, “The State will take a stake in Air France-KLM” to become again “The first shareholder” of the company, with a stake of up to 29.9%. Just under 30%, so as not to have to launch a public tender offer (OPA) on the entire capital. This operation will result in a reorganization of the round table of the Franco-Dutch group.
In February 2019, the Netherlands surprisingly and aggressively rose to 14% of Air France-KLM’s capital to equal France’s 14.3% stake in the tour de table. This time, the Dutch authorities have indicated that they will not follow the future capital increase. Similarly, the American Delta Airlines, which holds 8.8% of the capital, has indicated that it will not participate in the capital increase either. Only China Eastern, which also owns 8.8% of the shares, has indicated that it will participate in the transaction, but that its future participation will be “Strictly less than 10% of the share capital”.
If Brussels has given the green light to recapitalization, the European Commission has set its conditions. It got Air France to give up 18 slots, daily take-off and landing slots, at Orly and Roissy. These counterparts were the subject of fierce negotiations between Paris and Brussels. Originally, the European Commission required Air France to give up 24 daily slots, as it had requested from the German Lufthansa to validate a financial assistance plan.
You have 51.67% of this article to read. The rest is for subscribers only.