Air France-KLM gets $6.3b rescue, France to raise stake

Air France will get up to 1 billion euros in fresh capital as part of a shareholder subscription.
Air France will get up to 1 billion euros in fresh capital as part of a shareholder subscription.PHOTO: EPA-EFE

PARIS (BLOOMBERG) - Air France-KLM will receive as much as 4 billion euros (S$6.3 billion) and the French government could raise its stake to as high as 30 per cent as part of a recapitalisation plan for the indebted carrier slammed by the pandemic.

Air France will get up to 1 billion euros in fresh capital as part of a shareholder subscription, and convert a previous 3 billion-euro French loan into hybrid instruments, according to a statement on Tuesday (April 6) from the European Commission. In exchange, Air France will have to give up 18 daily slots at Orly airport outside Paris.

The French government could become the biggest shareholder in the airline as part of the plan, French Finance Minister Bruno Le Maire said on France Inter radio.

The long-awaited package was the focus of at times tense talks between Air France-KLM's biggest shareholders - France and the Netherlands - and the European Commission, which asked for a series of conditions to offset antitrust concerns. The governments last year granted the group a total of 10.4 billion euros in direct loans and state-backed guarantees.

The aid from France will benefit only the French arm of Air France-KLM, the EU said.

France had sought to soften Commission demands for measures aimed at boosting competition within the industry, including the surrender of coveted landing rights at Orly and Amsterdam Schiphol airports.