Air France-KLM announces a plan of capital-strengthening measures

 

Roissy, 6 April 2021

Air France-KLM announces a plan of capital-strengthening measures with the objective of strengthening its balance sheet, preparing the recovery and repositioning the Group on a sustainable financial trajectory

• Air France-KLM (“the Group”) announces the following measures in relation to Air France, which have been approved by the European Commission in its decision to authorize a €4 billion French State measures to recapitalise Air France and its Holding company:
   
  • A capital increase for an amount up to €1 billion, with a priority subscription period for shareholders, subject to market conditions and the prior approval on the prospectus by the Autorité des marchés financiers (the “AMF”) and,
     
  • Simultaneously, conversion of the €3 billion French State direct loan drawn into  perpetual hybrid bonds instrument.
     
• The Dutch State is continuing discussions with the European Commission regarding potential capital-strengthening measures for KLM.
   
• Additional measures to further strengthen the Group’s capital are currently under consideration, with several  steps to be taken before the 2022 Annual General Meeting.

On April 5 the Air France-KLM Group’s Board of Directors approved a plan to start the restoration of the Group's negative equity and further reinforce its cash position:

Capital increase with priority subscription period for shareholders

• The Group intends to launch a capital increase subject to market conditions and the approval on the prospectus by the AMF.
• This capital increase will be launched without preferential subscription rights but with a priority period for the shareholders, within the limits of the nineteenth resolution approved at the Annual General Meeting on May 26, 2020, allowing existing shareholders to not be diluted, by subscribing shares during the priority period up to their stake in Air France-KLM’s share capital. The offering will be composed of a private placement to institutional investors, a public offering and a priority period allowing all shareholders to support this transaction.
• The French State commits to participate in the capital increase while keeping its stake strictly below 30% of the share capital and voting rights.
• China Eastern Airlines intends to participate while keeping its stake strictly below 10% of share capital, as part of further reinforcement of strategical cooperation with the Group.
• The Dutch State which holds 14.0% of the share capital, has informed the Group that it will not subscribe to this capital increase.
• Delta Airlines which holds 8.8% of the share capital, has informed the Group that it will not subscribe to this capital increase due to the current framework of the CARES act in place in the United States.
• This operation will improve the Group’s equity by up to €1 billion under IFRS and French GAAP accounting standards, and bring the same amount of new money to the Group for the benefit of Air France.

Simultaneously, the fully drawn conversion of €3 billion French State loan into perpetual hybrid bonds instrument (“Super Subordinated Notes”):