Apollo Provides $561M Financing for Air France-KLM Engineering, Maintenance Unit

Apollo Global Management has sealed a deal to invest 500 million euro ($561 million) in European airline operator Air France-KLM via hybrid debt and equity financing.

The quasi-financing will be provided by funds managed by Apollo through the purchase of perpetual bonds issued by Air France’s new operational design and maintenance division.

The financing will be treated as the company’s equity and used for general corporate purposes and maintenance. The interest rate on perpetual bonds will be 6.9% for the first three years with a gradual increase and limitation in the future. Air France retains the right to redeem the bonds at any time after three years.

Air France-KLM adds the transaction will incur no change of ownership, operational and social aspects of Air France’s MRO activities.

The deal is part of the airline operator’s equity recovery strategy, announced in February 2023 and aimed at strengthening the balance sheet and liquidity, as well as recovering from the Covid-19 crisis.

Air France-KLM and Apollo Global Management entered a similar deal last year where the private equity firm invested 500 million euros to help repay French state aid.