Air France-KLM announces a 1.3 billion euros financing agreement with Apollo

FILE PHOTO: Air France-KLM publishes 2022 annual results

(Reuters) -Air France-KLM announced on Thursday a new financing agreement between one of its affiliate and funds and entities managed by Apollo Global Management in a bid to strengthen its balance sheet.

The 1.3 billion euros ($1.37 billion) financing will be accounted as quasi-equity under IFRS accounting standards, the airplane carrier said in a statement.

Apollo has an option to increase the nominal amount to up to 1.5 billion euros, Air France-KLM said.

The dedicated affiliate "will hold the trademark and most of the commercial partners contracts" for Flying Blue, the French and Dutch company's loyalty program, and "the exclusive issuer of miles for the airlines of the Group and partners."

The new structure will not lead to any changes for Flying Blue members or have a dilutive effect for shareholders, the company adds.

"This transaction will allow Air France-KLM to make an additional step towards its commitment to restore its IFRS equity and strengthen its balance sheet, in addition to net profit generation."

For Air France-KLM, this is the second cash injection from Apollo after a $560 million agreement in July.

The new transaction is expected to be completed by the end of the year.

($1 = 0.9485 euros)

(Reporting by Victor Goury-Laffont; Editing by David Gregorio)