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The French government has increased its stake in Air France-KLM to more than three times that of the Netherlands, strengthening its grip on the struggling airline.
A share issue by the struggling airline more than doubled the French government’s holding to 28.6pc, according to a statement on Monday, followed by China Eastern Airlines which increased its stake from 8.8pc to 9.6pc to become the second biggest shareholder.
The Netherlands, meanwhile, emerged from the sale with a diluted 9.3pc after the airline raised a total €1.04bn (£890m) from investors from a stock issue of €4.84 per share. The changing stakes upsets a politically sensitive equilibrium that has been in place for around two years, with France and the Netherlands having each held around 14pc of the Franco-Dutch airline. America’s Delta Air Lines also diluted its holding to 5.8pc.
The capital hike was part of a €4bn rescue package announced by the French government earlier this month, to help the airline which has fallen victim to a virtual global halt in travel amid the pandemic. It follows a €10.4bn debt bailout for the group last year, which was backed by both the French and Dutch governments.
The Dutch state declined to take part in the most recent aid, however, and is considering its own support package and is in talks to get approval from the European Union for a conversion of debt into equity.
Chief executive Ben Smith on Monday indicated Air France-KLM may soon raise additional capital to bolster its balance sheet as travel begins to pick up from the pandemic this summer and Europe makes progress on the vaccination rollout.
Speaking at an online industry event, Mr Smith signaled the group may quickly seek further funds and reduce debt, saying: “We do have heavy debt that is holding back our balance sheet, so this may have to get looked at again later in the year”.
Proceeds from the latest sale will be used to strengthen the French arm, according to the carrier, while economic, financial and environmental commitments that are conditions of the state loan have been “reiterated”.
Mr Smith also said Air France-KLM plans to match at least the 50pc of pre-crisis summer flight capacity it managed last year and is optimistic about a sharper rebound.