The government therefore invests money in Air France-KLM, which returns that money to the government. The advantage for Air France-KLM is that it replaces loans with equity and thus reduces interest costs. From the proceeds of the share issue, Air France-KLM wants to use 1.7 billion euros to more quickly repay the state aid it received during the corona crisis. It also wants to strengthen the balance.
In any case, 75 percent of the proceeds of the share issue will be used to repay capital support from the French state. This is beneficial for the company because this debt entails relatively high interest costs, write Minister Sigrid Kaag of Finance and Minister Mark Harbers of Infrastructure and Water Management in a letter to parliament.
The rest is used to increase the company’s equity. This has been negative for years and will remain negative even after the increase.
Air France-KLM had negative equity of 4.2 billion euros at the end of March. During the corona crisis, transport fell sharply.
The Dutch government owns 9.3 percent of the shares in Air France-KLM. It wants to keep that stake the same, so it will also buy 9.3 percent of the new shares that will be issued. This will involve almost 220 million euros.
Parliament has yet to give its approval
If the Netherlands did not purchase additional shares, it would have a smaller stake in the airline after the issue, with less control. The Senate and the House of Representatives still have to approve the purchase.
The French government, the largest shareholder of Air France-KLM with 26.8 percent of the shares, is also buying extra shares and wants to maintain the interest. The large container shipping company CMA CGM also wants to participate in the emission, for a maximum of 400 million euros.
