By Olivia Bugault

 

Air France-KLM said late Monday that it has launched the planned capital increase of around 988 million euros ($1.18 billion) and that the net proceeds will be used to strengthen the balance sheet and liquidity of its French arm.

The Franco-Dutch carrier said it will issue 186 million new shares at a price of between EUR4.84 and EUR5.31 a share, and that the capital raise for Air France could be up to EUR1.14 billion in the event that the increase option is exercised in full.

The moves comes after EUR4 billion in state aid to recapitalize Air France was approved by the European Commission last week. At the time, the airline said the French state and China Eastern Airlines Corp. were planning to join the capital increase, while the Dutch state said it wouldn't be participating.

The company also said then that the recapitalization plan includes the conversion of a EUR3 billion French state loan into a perpetual hybrid bonds instrument.

In a separate statement late Monday, Air France-KLM said it was strengthening its collaboration with China Eastern Airlines.

"In the context of the participation of China Eastern Airlines to the share capital increase of Air France-KLM, both airline groups have decided to extend the scope of their partnership," the company said. The airlines will expand their commercial collaboration and increase their operations between Beijing and Europe through their joint venture, it said.

 

Write to Olivia Bugault at olivia.bugault@wsj.com

 

(END) Dow Jones Newswires

April 13, 2021 02:16 ET (06:16 GMT)

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