Air France-KLM SA

Air France-KLM has submitted a binding offer to acquire between 44.9% and 49.9% of TAP Air Portugal from state holding company Parpública, marking a decisive step in the Portuguese flag carrier's privatization. The offer is backed by a comprehensive strategic plan covering passenger transport, cargo, loyalty, and maintenance, repair and overhaul activities, with a focus on developing new MRO facilities in Portugal alongside TAP Maintenance & Engineering, a partner of over 20 years. Delta Air Lines, Air France-KLM's joint-venture partner and shareholder, supports the bid and would promptly begin negotiations on a strategic commercial agreement with TAP, including reciprocal codeshare and loyalty benefits, should Air France-KLM be selected. The plan envisions positioning Lisbon as a unique Southern European hub, strengthening connectivity to the Americas and Africa, and integrating TAP into the Group's global network while safeguarding its brand, management, and headquarters in Portugal. Air France-KLM CEO Benjamin Smith stated the proposal is a long-term plan for TAP and Portugal, aiming to create a European global aviation champion and support European sovereignty.

Air France-KLM has successfully priced €500 million of senior unsecured notes under its Euro Medium Term Note program. The notes carry a 5-year maturity and a fixed annual coupon of 4.250%, with a yield of 4.318%. Net proceeds will primarily be used for general corporate purposes, supporting the group's balance sheet optimization by simplifying its capital structure, reducing funding costs, and increasing the proportion of senior debt. The transaction reflects investor confidence in Air France-KLM's credit quality, with the group's long-term debt rated BB+ by Standard & Poor's and BBB- by Fitch Ratings. BNP Paribas, Citi, and Crédit Agricole CIB acted as global coordinators, while Deutsche Bank, Goldman Sachs, ICBC, Santander, and SMBC served as joint active bookrunners.

Aviation borrowers have raised more than $10.5 billion in debt year-to-date, the strongest first-half pace since 2021. Athens International Airport SA is making its debut in the euro bond market with a seven-year benchmark deal, while TAP Air Portugal is moving ahead with a 300 million five-year junk-rated bond. Many current deals appear tied to refinancing debt raised during the pandemic, with more than $22 billion, or 64% of debt sold in 2020 and 2021, carrying maturities of five to seven years. The market backdrop may be improving as oil prices drop and travel stocks recover, supported by a possible US-Iran peace deal and record jet fuel production by US and European refiners, according to the International Energy Agency.

Air France-KLM has signed a new multi-purpose credit facility for €1 billion with a syndicate of 12 international banks. The facility, which can be drawn and redeemed at the issuer's full discretion, has an initial maturity in June 2028 and includes a one-year extension option at the lenders' discretion, potentially extending the maturity to June 2029. The purpose is to refinance existing financial instruments, including those associated with the group's M&A activity that may arise from the second half of 2026. The transaction strengthens the group's financial flexibility and complements its existing liquidity resources, with the group planning to continue its financing strategy through bond issuances to meet annual debt and hybrid redemptions. The facility benefits from attractive conditions reflecting banking partners' confidence in Air France-KLM's credit profile, and it will not impact the group's Gross Debt and Net Debt to Current EBITDA ratio, which stood at 1.5x at the end of March.