China Eastern Airlines to boost stake in Air France-KLM
China Eastern Airlines is set to buy additional shares in Air France-KLM. The Chinese company wants to take advantage of the large Air France-KLM share issue meant to help the airline company boost capital during the coronavirus crisis, ANP reported.
Some 186 million euros worth of new shares is being placed on the market for which Air France-KLM hopes to raise up to 1.1 billion euros. The French government and China Eastern Airlines have already pledged to buy up to 778 million euros, with 651 million euros coming France.
The French State’s stake in the company will likely reach 29.9 percent. For the Chinese company, the number is significantly should rise from 8.8 percent to almost 10 percent if it purchases the maximum number of new shares it can. By not participating in the recapitalization, the Dutch stake will dilute from 14 percent to just over nine percent.
KLM has indicated that, unlike its sister airline Air France, it does not see an 'acute need' to strengthen equity capital in the short term, as a result of which the Dutch government decided to opt out for the time being.
The European Commission recently agreed to up to 4 billion euros in extra aid from Paris to save Air France. Brussels emphasized that KLM is not eligible for the aid. The recapitalization of Air France includes the conversion of the previous French government loan of EUR 3 billion into shares or bonds.
China Eastern Airlines has been a codeshare partner with Air France since 2000, starting with the Paris-Shanghai route. A first joint venture agreement with Air France followed in 2012 and was extended to KLM in 2016.
China Eastern Airlines subsequently took an equity stake in Air France-KLM in 2017, forming the ambition for a long-term strategic partnership. In the coming period, the companies indicated they want to expand their cooperation even further.