Air France-KLM plans board meeting on refinancing, sources say

PARIS (Reuters) – Air France-KLM’s board of directors is expected to meet on Monday to discuss a state-backed refinancing plan to strengthen its balance sheet after a year of coronavirus shutdowns, two said on Friday. sources close to the case.

The airline group, which received 10.4 billion euros ($ 12.2 billion) in government-guaranteed loans last year, discussed a multi-step recapitalization plan to alleviate debt that as a result, sources said.

But the plan, likely to include converting a € 3 billion French government loan into hybrid instruments, has been delayed by disputes over European Union demands that Air France abandon take-off slots. and Paris-Orly landing as a condition.

French Finance Minister Bruno Le Maire signaled a breakthrough in those talks earlier this week, predicting a deal in “a few days”.

Air France-KLM declined to comment on the scheduled meeting of the airline group’s board of directors, first reported by Bloomberg.

EU officials initially requested a similar number of slots to the 24 ceded by German Lufthansa to Frankfurt and Munich in exchange for its government-backed capital hike, sources familiar with the talks said.

This position sparked protests from Air France, its unions and the government.

France and the Netherlands each own nearly 14% of Air France-KLM, and the Dutch state has held separate talks with the EU on converting its € 1 billion loan to KLM into hybrid debt in exchange for slot concessions at Amsterdam-Schiphol.

The conversion of public debt will not be enough to straighten Air France-KLM’s balance sheet, analysts believe, who predict that a new dilutive capital increase will follow.

The group told investors it plans to raise “quasi-equity and equity,” after its balance sheet recorded € 5.42 billion in negative equity as of December 31.