The group Air France-KLM entered into exclusive discussions with Apollo Global Management for quasi-equity financing of 1.5 billion euros “in the capital of a subsidiary holding contracts with the commercial partners of the Loyalty program FlyingBlue “.
After two investments of 500 million euros each in the Franco-Dutch group, Air France-KLM announced on July 27, 2023 “to have entered into exclusive discussions” with Apollo Global Management, with a view to “potential financing of 1.5 billion euros in the capital” of a operational subsidiary dedicated to the group. This “will own the brand of the loyalty program FlyingBlue and the majority of contracts with partners. It will become the sole issuer of Miles for airlines and partners”.
According to the press release, this financing would be “non-dilutive, structured by a quasi-equity instrument”, and therefore similar to that used by Air France in July 2022 on a fleet of spare engines as well as that carried out in July 2023 on assets Engineering and Maintenance (MRO). Under this agreement, Apollo “would subscribe to perpetual bonds” issued by this operational subsidiary of Air France-KLM. This financing would be accounted for as equity under IFRS, and would allow Air France-KLM to “continue to strengthen its balance sheet, in addition to generating net profits and/or issuing simple hybrid bonds”.
There proposed structure would not result in any change to the operation of the loyalty program for Flying Blue members and no social impact and employee contracts of both alliance members SkyTeam and Air France-KLM.
Air France-KLM retain operational management of the loyalty programand Air France and KLM would retain full database property Flying Blue, the statement concludes.