Air France-KLM to seek up to 4 billion euros to repay state aid, shares sink

By Piotr Lipinski

PARIS (Reuters) -Air France-KLM plans to raise up to 4 billion euros ($4.6 billion) as it seeks to repay state pandemic handouts, the airline said on Thursday, overshadowing robust earnings on a recovery in air travel and sending its shares down more than 4%.

The airline - which in 2020 received 10.4 billion euros in loans backed by France and the Netherlands, its two biggest shareholders - confirmed the need for a cash call it had been mulling in October at the time of its third-quarter results.

However it gave no detail about the terms and timing of any fundraising. "Air France-KLM intends to remain flexible on the transaction structures, as well as on the sequencing and the sizing of each instrument depending on market conditions," it said.

The money to be raised compares with the group's current market value of just below 3 billion euros. Its shares, which on Wednesday reached a three-month intraday high, were down around 4.5% at 4.267 euros by 0926 GMT.

The fourth-quarter performance was helped by a recovery in transatlantic travel, as the United States reopened to vaccinated travellers in November.

The group added it had started to see a pickup in bookings this quarter as Omicron restrictions start to ease.

Fourth quarter core profit or EBITDA reached 827 million euros, up from a Q3 figure of 796 million and the second straight quarter of profitability at that level since the outbreak of the pandemic.

INCREASED CAPACITY

For the year EBITDA reached 745 million euros, beating analysts forecasts, and the company's own guidance of a "slightly" positive figure.

Steven Zaat, chief financial officer, said the airline increased capacity on long-haul in the fourth quarter despite a resurgence of coronavirus cases due to the Omicron variant, which hurt short- and medium-haul travel in Europe.

For the first quarter of this year, the company forecasts EBITDA to break even, while available seat kilometres for the group's network passenger activity is seen at 73%-78% of 2019 levels, with the quarter impacted by the Omicron variant and a slowdown of business travel as companies still predominantly exercise a work-from-home model.

"We do not believe competition will sit on its hands, so high yields might not be reached, especially as business travel continues to suffer," Mulder added, referring to the group's ambition to reach 2019 capacity levels by 2024 and an "ambitious" outlook on margins and debt.

Since last week, however, Zaat said bookings have started to catch up, including for the summer period.

The company posted a better-than-feared net loss of 3.29 billion euros. Revenue of 14.32 billion outpaced the average estimate in a Refinitiv poll of 13.97 billion.

($1 = 0.8784 euros)

(Reporting by Piotr Lipinski; Editing by Sherry Jacob-Phillips and David Holmes)