Air France-KLM finds way to refinance outstanding debt

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Air France-KLM has successfully placed a note issue of €800 million which proceeds the airline group plans to use in order to refinance its outstanding debt.

The French-Dutch airline holding company announced having placed an issue of €800 million senior notes in two separate tranches, including the first with the final amount of the senior notes of €300 million and the second with the final size of €500 million. In the statement to the press, Air France-KLM outlined that all the net proceeds of the move will be used to pay down its outstanding debt as well as “gradually part of the State Aid debt package” which was granted to the air carrier in May 2020.

The recent note issue came as part of Air France-KLM’s plan to reinforce its balance sheet and manage liquidity while preparing for the market recovery. While fighting for an opportunity to stay afloat during the pandemic, the airline increased its long-term debt to €11 billion. To lessen the debt, in May 2021, Air France-KLM announced its concerns over the plan of raising more capital through equity and quasi-equity financial instruments, one of which, the note issue, has been already completed.

As for the state-aid, in April 2021, the European Commission approved a €4 billion recapitalization plan of Air France-KLM that could see the French state double its stake in the carrier. 

Following the rescue plan, in May 2021, the company managed to raise more than 1 billion in a new share issue. However, in exchange for the financial help, the government of France has doubled its influence and the shareholding percentage to 28,6 %, while the Dutch government now owns a significantly smaller part of 9.3 % of Air France-KLM shares. The carrier also agreed to a series of environmental measures, such as drastically reducing its domestic network.


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