The French-Dutch aviation group Air France-KLM wants to raise funds of around 2,3 billion euros with the help of a capital increase. This is to be accomplished by issuing new shares. The company intends to use the proceeds, among other things, to repay the government loans granted by the Netherlands and France.

The company is currently in final negotiations with the Apollo investment fund with an investment of 500 million euros. The money is to be paid out to a maintenance subsidiary and used to reduce the government loan. In addition, Air France-KLM wants to raise around 2,3 billion euros by issuing new shares. The subscription period runs from May 27, 2022 to June 9, 2022.

However, despite the enormous amount, the planned income is more of a drop in the ocean, because the group of companies was already heavily indebted before the corona pandemic. The planned proceeds are not sufficient to be able to fully repay the state loans. In addition, one would first like to repay subordinated bonds in the amount of 1,7 billion euros. These were also signed by the French state.

This is not Air France-KLM's first fundraising campaign, as a similar measure was taken last year. While the Netherlands were rather cautious after the first state aid, France also subscribed last year. Some bonds are now due and are to be redeemed or at least reduced with funds from the recent issue of new shares.

The total volume of the capital increase - taking all measures into account - is around four billion euros. The airline said it is keen to repay its debt in line with EU state financing rules, which prohibit the French carrier from participating in future airline consolidations. And that is exactly what now plays a role, because Ita Airways is commercially available in Italy. In the event of a takeover by MSC/Lufthansa the carrier could switch to the Star Alliance. This is exactly what Air France-KLM wants to prevent and is itself on Interested in buying Ita Airways.

As of March 31, Air-France KLM had an estimated 10,8 billion euros in cash. Coupled with ongoing capital raising efforts and overall improved earnings, the share sale plan should be the final key to consolidating the balance sheet. The transaction partnership with the French shipping giant CMA CGM will also be an additional help with a cash injection of around 400 million euros.