Air France-KLM announces a plan of capital-strengthening measures - Seite 2

• The €3 billion direct loan provided by the French State to Air France via Air France-KLM late in May 2020 will be converted into Super-Subordinated Notes of the same nominal amount to Air France via Air France-KLM, allowing the Group to restore part of its equity under IFRS accounting standards.
• This operation will improve the Group’s equity by €3 billion under IFRS accounting standards with no cash impact, while increasing the Group’s flexibility in its mandatory debt redemption profile spread over time (with Non Call period ranging from 4 to 6 years).

The Dutch State approved this set of actions and indicated  that it was continuing discussions with the European Commission on potential capital- strengthening measures for KLM.

Together with the expected recovery in EBITDA, this first step of capital-strengthening measures will progressively help the Group to reduce the Net Debt/EBITDA ratio below 3.0x by 2023.

Additional measures to further strengthen the balance sheet are currently under consideration with several steps to be taken before the 2022 Annual General Meeting, as the Group’s net equity will remain negative after this first step.

These measures could include the issuances of appropriate amounts of new equity as well as proportionate quasi-equity instruments, subject to market conditions. The hybrid perpetual bond instruments fully subscribed by the French State and resulting from this first step recapitalization could be used to compensate in part, by way of netting, to future equity and or quasi-equity raisings by the Group.

The objective of such additional measures will be to further reinforce the Group’s equity situation and reduce its Net Debt/EBITDA ratio circa 2.0x by 2023. In order to achieve this,  specific delegations would be then required and submitted at the Group’s next General Meeting, scheduled on May 26.

Additionally, the French state-backed loan (Pret Garantie d’Etat “PGE”) of €4 billion has been extended with a final maturity date in 2023. The Dutch State-backed loan guaranteed loan of €2.4 billion has a maturity date in 2025. These elements enable smoothen the debt redemption profile of the group and the airlines a smooth extension of the debt maturity profile of the Group.

Commitments made in order to comply with the European Commission’s “Temporary Framework for State aid measures to support the economy in the current Covid-19 outbreak” (TF).

Air France-KLM will be subject to commitments made by the French government in order to comply with the European Commission’s “Temporary Framework for State aid measures to support the economy in the current Covid-19 outbreak” (TF).