Air France-KLM mulls shelving planned cap increase

Another tide of government travel restrictions to curb the spread of the Omicron variant of the coronavirus, along with potential damage to travel demand, has forced Air France-KLM to consider postponing a planned capital increase, sources close to the matter have told Reuters.

The Air France and KLM Royal Dutch Airlines parent had reportedly been hoping to drum up another EUR1 billion euros (USD1.13 billion) or so by the end of 2021 to bolster its indebted finances and repay government aid. But this manoeuvre is now likely to be delayed, the two anonymous sources said.

“The mathematics of it doesn’t work. They need to sell a recovery story, and that doesn’t work with Omicron hovering,” one of them said.

Contacted by ch-aviation, Air France-KLM declined to comment.

The group already completed a EUR4 billion (USD4.5 billion) recapitalisation package in April, including state support and a EUR1.036 billion (USD1.175 billion) rights issue, which doubled the French government’s stake to 30%. In June, Air France-KLM raised a further EUR800 million (USD907 million) in additional capital through the issuance of new bonds.

It had more than EUR10 billion (USD11.3 billion) in cash on hand at the end of September and can afford to delay the plan, according to a French government source, but it will need to repay the state aid handed to it last year if it is to lift a European Union-imposed ban on mergers and acquisitions. The provision of French state funds has pushed Air France’s total debt to EUR10.2 billion (USD11.57 billion), Reuters reported.