Air France-KLM is Considering Raising More Capital

Aviation group Air France-KLM is considering raising more capital in an attempt to repair the battered balance sheet. The troubled airline is counting on the demand for air travel to pick up in the summer, ensuring that losses are stopped.


Financial director Frédéric Gagey stated in an explanation of the quarterly figures that various financial instruments, such as shares, are being studied as an option. Shareholders are asked to approve proposals later this month to bolster the airline’s equity.

Additional money could be used, among other things, to reduce society’s long-term debt. At the end of the first quarter, this amounted to 14.2 billion euros. According to CEO Ben Smith, this slows down the company’s balance sheet. Smith had already reported last month that more money might be needed to help Air France-KLM through the crisis after the French state stepped in again.

According to Gagey, there is a minimal risk of a “cash crisis” unless the summer season turns “catastrophic”. Last month, Air France-KLM raised more than 1 billion euros through a new share issue as part of a French bailout of 4 billion euros. This measure followed the EUR 10.4 billion in government loans and guarantees issued last year.

Gagey declined to say how much more the airline wants to raise, just saying that some could come from the Dutch government, which is still in talks with the European Commission about a KLM rescue operation.

German competitor Lufthansa also appealed for state aid to get through the crisis. Shareholders this week agreed to a capital increase of up to EUR 5.5 billion. The German airline has scaled back its capacity plans for the year and expects to offer 40 percent of pre-crisis levels. Less than a fifth of the flights were carried out in the first quarter.

IAG, the owner of British Airways, among others, will release results on Friday.

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