Air France-KLM board approves aid package for indebted carrier

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Air France-KLM board approves aid package for indebted carrier

According to people familiar with the matter, the Board of Air France-KLM approved an aid package aimed at strengthening the indebted carrier's balance sheet.

The plan will be unveiled early Tuesday, said the people who asked not to be named because the information is n't public. The funding includes the conversion of government loans into fresh bonds and raising hybrid equity, one said.

A spokeswoman for the company declined to comment; the European Commission and French government earlier reached agreement on fresh support for the carrier, which has been hurt since the start of the pandemic by a drop in air travel.

Air France-KLM's largest shareholders with a combined 28% stake granted the company 10.4 billion euros in direct loans and state guarantees last year. The governments have been working on a new package to reduce the carrier's debtload.

The commission has sought concessions to allow more competition, as it had for rival Deutsche Lufthansa AG's rescue. On Sunday, the French Minister of Finance Margrethe Vestager said that long and difficult negotiations with EU Competition Commissioner Bruno Le Maire had led to a fair and proportionate deal for the Air France arm.

The carrier would have to give up fewer than the 24 daily airport takeoff and landing slots at Paris-Orly airport, which the Commission had initially proposed in return for the state support, he said.

The Net Debt- Air France-KLM ballooned to 11 billion euros at the end of 2020 and it has long stalled a plan to seek equity and quasi-equity.

While Le Maire said the French government considers the carrier as strategic for the country, it must increase competitiveness, reduce carbon emissions and return to profit.

This did n't necessarily mean cutting jobs, he said. Air France and KLM burnt 2.1 billion euros in the last quarter of last year.

In February, the airline announced that it would operate at 40% of 2019 capacity in the first quarter and that losses would worsen. It is banking on the rollout of vaccines to underpin a recovery in the coming months. For more articles like this, please visit bloomberg.com at bloomberg.com.

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