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PARIS: Air France-KLM on Tuesday announced a bid to raise 2.26 billion euros ($2.4 bn) by issuing new shares, as the debt-laden company seeks to put the coronavirus crisis that has ravaged its finances behind it.

The Covid-19 pandemic cost the Franco-Dutch airline some 11 billion euros ($11.7 billion) over two years, after travel ground to a halt.

The airline has some 7.7 billion euros of debt despite massive bailouts by the French and Dutch governments, which own minority stakes in the former flag carriers that merged in 2004.

The company’s shares fell by 5.41 percent on Tuesday morning to 4.11 euros per share after the announcement.

The French and Dutch governments will take part in the latest funding round and keep the same percentage of shares, the airline said.

The French state is the largest stakeholder with 28.6 percent, while Netherlands holds 9.3 percent.

But two other main shareholders, the Chinese company China Eastern and the United States’ Delta Air Lines will see their stakes reduced in favour of a new player, French shipping giant CMA CGM.

Air France-KLM inks deal with cargo giant CMA CGM

China Eastern will see its share reduce to 4.7 percent from 9.6 percent, and Delta from 5.8 percent to 2.9 percent.

CMA CGM, based in the Mediterranean port city of Marseille, will invest up to 400 million euros, Air France-KLM said in a statement.

The French shipping company said last week it would take its stake up to nine percent.

This would make CMA CGM the third shareholder in the round of funding that starts on Wednesday and closes on June 9 goes as planned. The main purpose of the planned share issue is to repay the aid provided by the French state.

During the first recapitalisation operation, the French government agreed to convert three billion euros in loans into perpetual hybrid Air France-KLM bonds given that are considered as a form of equity.

The European Commission gave the green light for the aid, which saw France’s share double, as part of the exceptional measures taken to support businesses during the health crisis.

But the company was forced to make concessions including giving up slots at Orly, Paris’ second-largest airport after Charles de Gaulle.

The airline, which plans to hold a general assembly with shareholders later on Tuesday, announced last week 500 million euros from the American private equity firm Apollo would go towards reimbursing the French state.

Apollo plans to invest in the company’s subsidiary that owns a fleet of Air France spare engines.

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