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Air France-KLM poised to announce refinancing steps

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FILE PHOTO: The first Air France airliner's Airbus A350 prepares to take off after a ceremony at the aircraft builder's headquarters in Colomiers near Toulouse, France
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PARIS (Reuters) - The board of Air France-KLM was meeting on Monday to approve new French government-backed refinancing measures designed to see the airline group through the COVID-19 crisis, sources close to the situation said.

Air France-KLM is expected to convert part of its 4 billion euros ($4.7 billion) in direct government loans into hybrid instruments and raise new equity capital under the plans to be announced by Tuesday morning, the sources told Reuters.

The company and the French finance ministry both declined to comment on Monday.

Air France-KLM, which last year received a total of 10.4 billion euros in loans backed by France and the Netherlands, has for months been discussing a multi-stage recapitalisation plan to lighten the resulting debt load.

After drawn-out talks with Brussels over the number of take-off and landing slots at Paris-Orly airport to be given up by Air France in return for renewed aid, France's finance minister said on Sunday a compromise agreement had been reached.

France and the Netherlands each own close to 14% of Air France-KLM, and the Dutch state has held separate EU talks over converting its 1 billion-euro loan to KLM into hybrid debt, in return for slot concessions at Amsterdam-Schiphol airport.

($1 = 0.8467 euros)

(Reporting by Laurence Frost. Editing by Mark Potter)