Air France-KLM And Apollo Global Management signed last week a “final agreement” so that the investment fund injects 1.3 billion euros in new subsidiary backed by the Flying Blue loyalty programwith the possibility of extending the nominal amount up to 1.5 billion euros before the transaction is finalized.
This operational subsidiary will hold the brand and the majority of contracts with commercial partners linked to Flying Blue, the joint loyalty program of Air France and KLM. The latter will become the sole issuer of miles for airlines and partners, making it possible to evolve and promote the growth prospects of the program.
The Air France-KLM airline group thus wants “take a further step in its commitment to restore its equity“, negative since the start of the health crisis. Apollo’s investment will in fact take the form of a subscription to perpetual bonds, assimilated to equity. Via the same financial instruments, the American fund had already injected 500 million euros into subsidiaries of Air France-KLM twice, the first in July 2022 in a branch that owns a fleet of spare engines, and the second a year later in Air France’s engineering and maintenance components (MRO) business.
“We continued our efforts to restore our equity, while leveraging the value of the group’s assets, as illustrated by the non-dilutive financing agreement for our Flying Blue loyalty program“, welcomed the general director of the Franco-Dutch group, Benjamin Smith.
According to Air France-KLM, “the agreed structure will not result in any changes to Flying Blue members, any changes to social aspects, nor to the contracts of employees of Air France, KLM or Air France-KLM”. Furthermore, “Air France-KLM will continue the management and operation of its loyalty program and Air France and KLM will retain full ownership rights to their customer database“, numbering more than 19 million.