Air France-KLM to raise 1 billion euros via share issue By Reuters

PARIS (Reuters) -France is bailing out stricken Air France-KLM via a one billion euro share issue that will more than double its stake in the airline to nearly 30% while its Dutch co-owners ruled out taking part in the refinancing, terms of a proposed capital increase showed on Monday.

Air France-KLM said in a statement it had launched a share issue to raise about 988 million euros ($1.2 billion) to strengthen its liquidity and finance its general needs in the context of the COVID-19 crisis.

The new shares will be priced at 4.84 and 5.31 euros apiece.

The French state, which holds 14.3% of the airline’s share capital, has committed to subscribe up to a maximum of 65.9% of the capital increase, so as not to hold more than 29.9% of the company’s share capital following completion of the operation.

China Eastern Airlines, which holds 8.8%, will subscribe to the issue in order to hold less than 10% of the firm’s capital.

The Dutch state, which holds 14.0% of the share capital, has informed the company of its intention not to participate in the capital increase. Delta Air Lines (NYSE:DAL), which holds 8.8% of the share capital, will also not partake.

Air France-KLM said it was not aware of the intentions of its other shareholders in relation to the capital increase.

In a separate statement, the airline said that in the context of China Eastern’s participation in the capital increase, both airline groups have decided to extend the scope of their partnership through intensified commercial cooperation and an extended collaboration to non-commercial related activities such as ground services, catering or maintenance.

They will also increase their footprint on the Beijing market, with the Paris-Beijing and Amsterdam-Beijing routes joining the current joint venture between Air France-KLM and China Eastern Airlines when conditions are satisfied.

Following a codeshare partnership that started in 2000 on the Paris-Shanghai route, China Eastern first took an equity stake in Air France-KLM in 2017. ($1 = 0.8393 euros)