Air France-KLM gets $560 million cash injection from Apollo


Air France-KLM said on Friday it had signed a definitive agreement with private equity firm Apollo Global Management for a 500 million euro ($561 million) capital injection for one of its engineering and maintenance units. Sale and leaseback deals are common financing mechanisms in aviation. But a flood of investment from new sources of funding has increased competition for traditional leasing companies.

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The financing from Apollo will be used for the French company's Engineering and Maintenance (MRO) components activity and it will not result in a change of ownership of the division nor will it have any impact on employees' contracts, the company said. Apollo will subscribe to perpetual bonds bearing an interest rate of 6.9% for the first three years, after which gradual step-ups and caps will be applied, the company said.

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Air France will have the ability to redeem them at any time after three years. Air France-KLM and Apollo Global Management entered into a similar solution last year where the private equity firm invested 500 million euro in the company to help repay French state aid.

($1 = 0.8913 euros)

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Source: Reuters

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