April 8, 2021

Willkie’s Paris office represents Air France KLM on the recapitalization of Air France and its holding company.

On April 6, Air France-KLM announced a plan of capital-strengthening measures with the objective of strengthening its balance sheet, preparing for the recovery and repositioning the Group on a sustainable financial trajectory.

Air France-KLM announced the following measures in relation to Air France, which have been approved by the European Commission in its decision to authorize a €4 billion French State measure to recapitalize Air France and its holding company:

  • a capital increase for an amount up to €1 billion, with a priority subscription period for shareholders, subject to market conditions and the prior approval on the prospectus by the Autorité des marchés financiers (the “AMF”) and,
  • simultaneously, the conversion of the €3 billion French State direct loan drawn into perpetual hybrid bonds instrument.

Additional measures to further strengthen the Group’s capital are currently under consideration, with several steps to be taken before the 2022 Annual General Meeting.

The French State has committed to participate in the capital increase while keeping its stake strictly below 30% of the share capital and voting rights. China Eastern Airlines intends to participate while keeping its stake strictly below 10% of share capital, reinforcing strategic cooperation efforts with the Group. The Dutch State, which holds 14.0% of the share capital, has informed the Group that it will not subscribe to this capital increase. Delta Airlines, which holds 8.8% of the share capital, has informed the Group that it will not subscribe to this capital increase due to the current framework of the CARES act in place in the United States.

Air France-KLM will be subject to commitments made by the French government in order to comply with the European Commission’s “Temporary Framework for State aid measures to support the economy in the current Covid-19 outbreak” (TF). These commitments, include Air France’s release of up to 18 take-off and landing rights (slots) at Paris-Orly airport to a competing carrier in order to create or develop an existing base at that airport, provided that the competing carrier obtaining Air France’s slots bases its aircraft and crews at Paris-Orly airport, in compliance with national and EU labor laws. Other general commitments were made under the TF, including restrictions on acquisitions, share buy-backs dividend distributions and executive management’s remuneration. These commitments are applicable to the entire Group with the exception of KLM and its subsidiaries.

In April 2020, Willkie represented Air France KLM and Air France on securing funding of €7 billion to help overcome the COVID-19 crisis. Click here to read Willkie’s 4/29/2020 announcement.

Willkie’s team was led by partner Lionel Spizzichino and included partners Faustine Viala and Paul Lombard; counsel Maxime de l’Estang, Charles-Antoine Erignac and Audrey Nelson and associates Batiste Saint-Guily, Virgile Chanel, Ghita Lorabi and Sylvain Petit.