CMA CGM to acquire stake in Air France-KLM

The Franco-Dutch transport group and the Marseille shipowner will receive a joint offer for air transportation. And CMA CGM will grow to a maximum of 9% of the capital of Air France-KLM.

An unexpected guest soon in the capital of Air France-KLM. On Tuesday, ahead of the opening of the stock exchange, the Franco-Dutch air carrier and the Marseille shipowner CMA CGM announced in a joint press release the conclusion of ” a major long-term strategic partnership in the air transportation industry. “With this agreement,” CMA CGM will become the reference shareholder of Air France KLM. »

Obviously, the world’s third largest container ship operator will be able to occupy up to 9% of the air transport group. Had the positions remained the same, this would have made him the fourth shareholder of the Franco-Dutch operator after the French state (28.6%), China Eastern Airlines (9.6%), the Dutch state (9.3%). But ahead of the American company Delta Airlines (5.8%).

But be careful, it’s not done. This equity investment will come at a time of a capital increase that Air France-KLM wanted to make within a few months. The group led by Ben Smith has said over and over again that they want to increase their capital by four billion euros, in particular through a capital increase.

Need to uphold justice

However, this requires new shareholders. The French and Dutch states declared that they would participate in the operation. But as for France, which already increased its stake in Air France-KLM last year on the occasion of a previous one billion capital increase, there is no question of becoming a shareholder more important: exceeding 30% will force it to apply for a takeover of the group which is not the intention of the government at all.

China Eastern and Delta have not announced their intentions. But in a context where China tends to curl up in the fight against Covid, it is doubtful that China Eastern will be involved in the operation.

Thus, CMA CGM’s desire to become a shareholder of Air France-KLM is great news for the air transport group. Because the Franco-Dutch actor absolutely needs to strengthen his capital. This transaction will allow him to quickly pay off his PGE (government-guaranteed loan), on which he still has to pay 3.5 billion out of four billion.

This operation is necessary: ​​until he repays this loan, he will not be able to participate in the consolidation of the air transport sector. In particular, the European Commission prohibits a company from receiving 10% of another company’s capital until it has reimbursed 75% of its PGE.

stock market shooting window

Today, however, airlines are sold at very affordable prices. And Air France-KLM, disabled from its PGE, is currently unable to compete, unlike Lufthansa, which paid off its government loans in the fall of 2021. Quoted in the press release, CMA CGM CEO Rodolphe Saade was right: Through our participation in its capital, Air France-KLM will be able to count on our support in its future developments.”He says.

But the potential arrival of the CMA CGM will not solve all the problems. In order to implement the capital increase, Air France-KLM needs to find the right market window. Already twice the group was close to the start of the operation and was forced to surrender at the last moment: in late November, when Omicron sowed panic, and in February, when the war in Ukraine began.

To prevent the current shareholders from being too diluted, Air France-KLM’s stake should be around €4.50. But today, before the opening of the stock market, it cost only 3.96 euros. So we’ll have to wait a bit.

The largest player in the air transportation market

In addition to this financial aspect, this partnership includes the main operating component of freight transportation. ” Air France-KLM and CMA CGM will jointly and exclusively operate the entire cargo aircraft capacity of their companies, i.e. 10 cargo aircraft in operation and 12 others on order from the two groups. the two giants said in a joint press release. Added to this is the marketing of the holds of 160 Air France-KLM aircraft. With this partnership, signed for at least a decade, the two players together will become a leading player in the air travel industry, which has become a highly profitable and growing business since the start of the pandemic. Ben Smith, CEO of Air France-KLM, is not wrong: ” This is a key step that will significantly strengthen and develop the Group’s position in the air cargo industry. “, he emphasizes.

This move confirms the ambitions of the CMA CGM. Taking advantage of the huge profits made over the past 18 months, the shipowner continues to strengthen its position to become a global player in the field of international cargo transportation. In particular, he bought a terminal in the Port of Los Angeles for almost two billion euros and took 51% of the capital of the French company Colis Privé, which delivers e-commerce to individuals.

By joining forces with Air France-KLM in the field of air transportation, it takes a new step forward and becomes a real competitor to the world leader in container ships Maersk, which is also diversifying its activities in all directions.