Reuters
Published May 20, 2022 03:36AM ET
Updated May 20, 2022 08:41AM ET
By Dominique Vidalon
PARIS (Reuters) -Air France-KLM said on Friday it had entered exclusive talks with private equity firm Apollo for a 500 million euro ($529 million) capital injection for one of its engineering and maintenance units to help repay French state aid.
"The proceeds of the transaction would enable Air France-KLM and Air France to partially redeem the French state perpetual bonds," the airline said, adding it would not involve any operational or workforce-related changes.
The airline's current market capitalisation is 2.73 billion euros.
An Air France-KLM spokesperson said the deal with Apollo Global Management (NYSE:APO) would not result in the buyout firm taking an equity stake and was "purely financial".
The Air France-KLM unit involved owns a pool of spare engines.
A source close to the matter said revenue would be generated through "giving Air France access to this spare engines pool".
Sale and leaseback deals are common financing mechanisms in aviation, allowing airlines to sell freshly delivered planes and engines to lessors and rent them back to lighten their balance sheets.
But a flood of investment from new sources of funding has increased competition for traditional leasing companies.
The Dutch finance ministry, a shareholder in the airline group, said it supported the proposal.
"Attracting private investors is good for the financial position of the company. We have a common interest that it frees itself of state aid," the ministry told Reuters.
At 1215 GMT, Air France-KLM shares were up 2.8% to 4.37 euros, extending near-double digit gains this year.
Air France-KLM said in February it planned to raise up to 4 billion euros to repay support it received during the pandemic.
It said this month it was considering measures such as a capital increase and quasi equity instruments to speed up payments to the French state, its top shareholder.]
Shipping firm CMA CGM announced this week it would take a major stake in Air France-KLM.
($1 = 0.9449 euros)
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.