French shipping group CMA CGM plans stake in Air France-KLM in cargo deal
Air France-KLM and CMA CGM Group have agreed on a deal to jointly sell their air freight capacity, which will also include the French transportation and shipping company becoming a shareholder of the airline group.
As part of the strategic partnership, CMA CGM plans to acquire up to 9% of the capital of the Franco-Dutch airline group and seek a seat on the board. It said the investment could happen as part of the Air France-KLM's planned capital increase.
The deal, with an initial duration of 10 years, remains subject to the approval of the competition authorities within the European Union and of employee representatives of both companies.
If it acquires the stake as planned, CMA CGM would become Air France-KLM’s fourth-largest shareholder behind the French state (28.6%), China Eastern (9.6%), the Dutch state (9.3%), and ahead of the US carrier Delta Airlines (DAL) (5.8%).
The move continues CMA CGM’s strategy to broaden its logistics expertise. Since the beginning of the COVID-19 pandemic, CMA CGM Group has taken a more active part in air freight. In February 2021, the company created its own cargo airline, CMA CGM Air Cargo. The company acquired five Airbus A330-200 freighters and placed an order for four A350s.
“This partnership is fully in line with CMA CGM's strategy and its ambition to become a leader in integrated logistics, for the benefit of its customers,” Rodolphe Saadé, Chairman and CEO of the CMA CGM Group said. “It allows us to significantly accelerate the development of our air division, CMA CGM Air Cargo, which was created just over a year ago, and to position our two companies among the world's leading players in air freight.”
Air France-KLM is not the only airline that has caught the eye of shipping firms looking to boost their air freight credentials. MSC has made a bid for ITA Airways, the successor to Alitalia, while Klaus-Michael Kuehne, the majority owner of logistics group Kuehne+Nagel, has doubled his stake in Lufthansa (LHAB) (LHA) to 10%.
As for other airlines, cargo has been a bright spot for Air France-KLM during the COVID-19 crisis, helping to compensate for the loss of some of its activities during the crisis, such as business traffic which has been slow to recover. Moreover, as a condition of receiving €7 billion in state aid from France in the form of two loans, Air France had to forego some domestic routes in its home country if an alternative journey by train of less than two hours and 30 minutes was available.
Reflecting the improving demand for air travel in 2022, Air France-KLM reported an operating profit of over €30 million ($32 million) for the month of March 2022.
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