Air France Gets EU Approval for EUR4 Bln Recapitalization

The European Commission said Tuesday that it has approved France’s plans to grant up to 4 billion euros ($4.7 billion) for the recapitalization of Air France through its holding company Air France-KLM under European state aid rules.
“France will contribute up to EUR4 billion to reinforce Air France’s equity and help the airline face financial difficulties resulting from the coronavirus outbreak,” Margrethe Vestager, the commission’s executive vice-president, said.
Air France-KLM has suffered major operating losses as a result of travel restrictions in France and many destination countries due to the coronavirus pandemic.
The recapitalization includes the conversion of the EUR3 billion loan already granted by France into a hybrid capital instrument and a capital injection by the state through a subscription of new shares in a limit of EUR1 billion, according to the European Commission.
France owns a 14.3% stake in Air France-KLM.
KLM, the other subsidiary of the group, won’t benefit from the aid.
Under the terms of the recapitalization agreement, France will receive an appropriate remuneration for the investment and Air France and its holding company will be incentivised to buy back the state’s equity participation when the economic situation will allow it.