Air France-KLM enters into exclusive discussions with Apollo for a 500-million euros capital injection into an affiliate owning spare engines

Rhea-AI Summary

Air France-KLM has entered exclusive discussions with Apollo Global Management for a 500 million euros capital injection into an affiliate that manages spare engines. This funding aims to reinforce the Group's equity, facilitate partial reimbursement of French State Aid, and lower the Group's debt costs. The transaction is aligned with the European Commission’s framework for state aid during the Covid-19 pandemic and will not impact operational aspects or employee contracts. The capital will improve Air France-KLM's balance sheet by being recorded as equity under IFRS.

Positive

• Capital injection of 500 million euros to strengthen equity.
• Partial reimbursement of French State Aid will reduce debt.
• No operational or employee impact from the transaction.
• Funds will support future fleet renewal through spare engine acquisitions.

Negative

• None.

Paris, 20 May 2022

Air France-KLM enters into exclusive discussions with Apollo for a
500-million euros capital injection into an affiliate owning spare engines

• Reinforcement of Group’s equity
• Financing proceeds allocated to partial reimbursement of the French State Aid
• Reduction of Group’s cost of debt
  
  

Following announcement of the second step of equity strengthening measures at the Full Year 2021 results presentation, Air France-KLM announces today that it has entered into exclusive discussions with Apollo Global Management regarding the injection of 500 million euros of capital to an operating affiliate of Air France, owning of a pool of spare engines of Air France dedicated to its Engeneering and Maintenance Activity.

The proceeds of the transaction would enable Air France-KLM and Air France to partially redeem the French State perpetual bonds, in accordance with the European Commission’s “Temporary Framework for State aid measures to support the economy in the current Covid-19 outbreak”, as well as facilitate the financing of future spare engine acquisitions under Air France’s fleet renewal program.

The structure will incur no change on operational and social aspects. Therefore, there will be no change in the way to use the spare engines, and no impact on Air France or Air France-KLM employees contracts.

The capital injected would be accounted as equity under IFRS, hence strengthening Air France-KLM’s and Air France’s balance sheet.

Investor Relations                                                                Press
Frédéric Kahane                                       Michiel Klinkers                                
+33 1 49 89 52 59                        +33 1 49 89 52 60                        +33 1 41 56 56 00
frkahane@airfranceklm.com                         Michiel.Klinkers@airfranceklm.com

Attachment

• Air France-KLM - Press Release - exclusive discussions ENG

FAQ

What is the significance of the 500 million euros capital injection for AFLYY?

The 500 million euros capital injection aims to strengthen Air France-KLM's equity and reduce debt costs, facilitating the reimbursement of French State Aid.

How will the discussions with Apollo affect AFLYY shareholder equity?

The capital injection will be recorded as equity under IFRS, enhancing Air France-KLM's and Air France's balance sheet, positively benefiting shareholder equity.

Will the exclusive discussions with Apollo impact Air France employees?

No, the structure of the transaction ensures there will be no changes to operational aspects or employee contracts.

What are the future plans for spare engine acquisitions related to AFLYY?

The proceeds from the capital injection will facilitate financing for future spare engine acquisitions as part of Air France's fleet renewal program.