The French government has announced plans to contribute to a $4.7 billion recapitalisation of Air France-KLM, increasing its stake from the current 14.3% to nearly 30%. This will make the government Air France’s biggest shareholder.
The French government is seeking to convert a 3 billion-euro loan granted last year into a perpetual hybrid bond instrument, in addition to subscribing to a 1 billion-euro share issue.
However, the deal requires the airline to find a “credible exit strategy” within a year, and cut its shareholding to pre-crisis levels by 2027. Dividends, management bonuses, and share buybacks are also barred until most or all of the aid is repaid. Additionally, the airline will give up 18 Paris-Orly take-off and landing slots to competitors, which amounts to 4% of its current portfolio at the airport.
The Netherlands, which bought 14% of the airline in 2019 to counter French influence, will nevertheless not join the capital hike.
Air France-KLM is a Franco-Dutch airline holding company with its headquarters at Charles de Gaulle Airport in Tremblay-en-France, near Paris.