Dutch gov't to spend €220 million on more Air France-KLM shares

Airline group Air France-KLM wants to raise almost 2.3 billion euros by issuing shares. The company intends to use the money to pay back the state aid it received during the coronavirus crisis and strengthen its balance sheet. The Dutch government indicated that it wants to buy shares, Ministers Sigrid Kaag of Finance and Mark Harbers of Infrastructure confirmed to parliament. "Based on current expectations, the costs for participation are approximately 220 million euros," they said.

The Netherlands currently has an equity interest of 9.3 percent in Air France-KLM and almost 14 percent of the voting rights. If the government does not participate in the issue, whereby more shares come onto the market, that interest will be diluted, leading to less control. According to Air France-KLM, the government indicated that it wants to maintain the interest. Parliament also needs to approve the investment.

Air France-KLM plans to issue over 1.9 million new shares. Of the proceeds, 1.7 billion euros will go toward repaying the coronavirus support the company received.

The French State, the largest shareholder of Air France-KLM with a stake of 28.6 percent, will also participate and maintain its stake.

Air France-KLM recently revealed that it had signed a major air freight deal with French container carrier CMA CGM. The latter company will buy in during the issue for 400 million euros and previously said that it would take a maximum stake of 9 percent. Partners China Eastern Airlines and Delta Air Lines are also participating. However, the latter two will roughly halve their stake as they sell some of their rights to the offering to CMA CGM.

Air France-KLM was hit hard by the coronavirus pandemic, which made international air travel virtually impossible in the first lockdown. The company received billions of euros in state aid to keep the airlines in the air. Even after the strictest coronavirus restrictions were lifted for travelers, the airline combination sold fewer tickets. The French-Dutch group ended 2021 with a loss of billions of euros. There was some recovery during the second coronavirus year as more coronavirus measures relaxed, but the loss still amounted to almost 3.3 billion euros.